Fair value measurements (Tables)

9 Months Ended

Sep. 30, 2014

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

Our financial assets and liabilities are summarized below as of September 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)
September 30, 2014
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$	2,839	$	2,839	$	2,323	$	516	$	—
States, municipalities and political subdivisions		2,025		2,025		—		2,025		—
Foreign governments		12,330		12,330		8,001		4,329		—
Corporate bonds		9,930		9,928		—		9,919		9
Mortgage-backed securities		1,829		1,829		—		1,829		—
Investments in equity securities		118,909		118,909		118,847		60		2
Investment in Heinz Holding Preferred Stock		7,710		8,376		—		—		8,376
Other investments		19,178		19,178		—		—		19,178
Loans and finance receivables		12,535		12,847		—		39		12,808
Derivative contract assets ⁽¹⁾		86		86		—		16		70
Derivative contract liabilities:
Railroad, utilities and energy ⁽¹⁾		146		146		2		95		49
Finance and financial products:
Equity index put options		4,512		4,512		—		—		4,512
Credit default		155		155		—		—		155
Notes payable and other borrowings:
Insurance and other		12,328		12,783		—		12,783		—
Railroad, utilities and energy		49,694		55,445		—		55,445		—
Finance and financial products		12,790		13,327		—		12,743		584

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 nine months ending September 30, 2014 and 2013 follow (in millions).


	Investments in fixed maturity securities			Investments in equity securities and other investments			Net derivative contract liabilities
Nine months ending September 30, 2014
Balance at December 31, 2013	$	372		$	17,958		$	(5,255	)
Gains (losses) included in:
Earnings		—			—			644
Other comprehensive income		13			1,228			4
Regulatory assets and liabilities		—			—			(3	)
Dispositions and settlements		(1	)		—			(1	)
Transfers into (out of) Level 3		(375	)		(6	)		(35	)

Balance at September 30, 2014	$	9		$	19,180		$	(4,646	)

Nine months ending September 30, 2013
Balance at December 31, 2012	$	652		$	15,785		$	(7,847	)
Gains (losses) included in:
Earnings		—			523			2,119
Other comprehensive income		(12	)		1,310			(5	)
Regulatory assets and liabilities		—			—			1
Dispositions and settlements		(18	)		(31	)		(56	)
Transfers into (out of) Level 3		—			(1,495	)		—

Balance at September 30, 2013	$	622		$	16,092		$	(5,788	)

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

Quantitative information as of September 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	$	12,451	Discounted cash flow	Expected duration	6 years

				Discount for transferability restrictions and subordination	97 basis points

Common stock warrants		6,727	Warrant pricing model	Discount for transferability and hedging restrictions	8%
Net derivative liabilities:
Equity index put options		4,512	Option pricing model	Volatility	20%

Credit default-states/municipalities		155	Discounted cash flow	Credit spreads	9 basis points