Fair value measurements (Tables)

6 Months Ended

Jun. 30, 2014

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

Our financial assets and liabilities are summarized below as of June 30, 2014 and December 31, 2013 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, 2014
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$	2,832		$	2,832		$	2,270		$	562		$	—
States, municipalities and political subdivisions			2,111			2,111			—			2,111			—
Foreign governments			12,752			12,752			7,771			4,981			—
Corporate bonds			9,850			9,860			—			8,875			985
Mortgage-backed securities			1,876			1,876			—			1,876			—
Investments in equity securities			119,192			119,192			119,125			60			7
Investment in Heinz Holding Preferred Stock			7,710			8,384			—			—			8,384
Other investments			17,920			17,920			—			—			17,920
Loans and finance receivables			12,517			11,589			—			48			11,541
Derivative contract assets ⁽¹⁾			90			90			3			27			60
Derivative contract liabilities:
Railroad, utilities and energy ⁽¹⁾			126			126			1			74			51
Finance and financial products:
Equity index put options			4,734			4,734			—			—			4,734
Credit default			191			191			—			—			191
Notes payable and other borrowings:
Insurance and other			12,410			12,918			—			12,918			—
Railroad, utilities and energy			48,840			54,539			—			54,539			—
Finance and financial products			12,837			13,458			—			12,849			609

December 31, 2013
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$	2,658		$	2,658		$	2,184		$	473		$	1
States, municipalities and political subdivisions			2,345			2,345			—			2,345			—
Foreign governments			11,073			11,073			7,467			3,606			—
Corporate bonds			11,237			11,254			—			10,187			1,067
Mortgage-backed securities			2,040			2,040			—			2,040			—
Investments in equity securities			117,505			117,505			117,438			60			7
Investment in Heinz Holding Preferred Stock			7,710			7,971			—			—			7,971
Other investments			17,951			17,951			—			—			17,951
Loans and finance receivables			12,826			12,002			—			454			11,548
Derivative contract assets ⁽¹⁾			87			87			3			15			69
Derivative contract liabilities:
Railroad, utilities and energy ⁽¹⁾			208			208			1			198			9
Finance and financial products:
Equity index put options			4,667			4,667			—			—			4,667
Credit default			648			648			—			—			648
Notes payable and other borrowings:
Insurance and other			12,440			12,655			—			12,655			—
Railroad, utilities and energy			46,655			49,879			—			49,879			—
Finance and financial products			13,129			13,505			—			12,846			659

⁽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 six months ending June 30, 2014 and 2013 follow (in millions).


	Investments in fixed maturity securities			Investments in equity securities and other investments			Net derivative contract liabilities
Six months ending June 30, 2014
Balance at December 31, 2013	$	372		$	17,958		$	(5,255	)
Gains (losses) included in:
Earnings		—			—			369
Other comprehensive income		—			(31	)		4
Regulatory assets and liabilities		—			—			—
Dispositions and settlements		(1	)		—			1
Transfers into (out of) Level 3		(56	)		—			(35	)

Balance at June 30, 2014	$	315		$	17,927		$	(4,916	)

Six months ending June 30, 2013
Balance at December 31, 2012	$	652		$	15,785		$	(7,847	)
Gains (losses) included in:
Earnings		—			523			1,715
Other comprehensive income		(12	)		722			(5	)
Regulatory assets and liabilities		—			—			2
Dispositions and settlements		(8	)		(31	)		(45	)
Transfers into (out of) Level 3		—			(1,495	)		—

Balance at June 30, 2013	$	632		$	15,504		$	(6,180	)

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

Quantitative information as of June 30, 2014, 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 Inputs	Weighted Average
Other investments:
Preferred stocks	$	12,306	Discounted cash flow	Expected duration	6 years

				Discount for transferability restrictions and subordination	97 basis points

Common stock warrants		5,614	Warrant pricing model	Discount for transferability and hedging restrictions	9%
Net derivative liabilities:
Equity index put options		4,734	Option pricing model	Volatility	20%

Credit default-states/municipalities		191	Discounted cash flow	Credit spreads	17 basis points