10-Q 1 a6706198.htm BERKSHIRE HATHAWAY INC. 10-Q a6706198.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2011
 
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
Commission file number 001-14905
 
BERKSHIRE HATHAWAY INC.
(Exact name of registrant as specified in its charter)
 
Delaware
47-0813844
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification Number)
 
 
3555 Farnam Street, Omaha, Nebraska 68131
(Address of principal executive office)
(Zip Code)
 
(402) 346-1400
(Registrant’s telephone number, including area code)
 
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  x
Accelerated filer  ¨
Non-accelerated filer  ¨
Smaller reporting company  ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ¨    No  x
 
Number of shares of common stock outstanding as of April 29, 2011:
 
Class A —           941,481
Class B —  1,061,009,224
 


 
 
 
 
 
BERKSHIRE HATHAWAY INC.
 
   
Page No.
 
     
         
     
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1

 
 
 
 
and Subsidiaries
 
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
 
   
March 31,
   
December 31,
 
 
2011
   
2010
 
   
(Unaudited)
       
ASSETS
           
Insurance and Other:
           
Cash and cash equivalents
  $ 38,401     $ 34,767  
Investments:
               
Fixed maturity securities
    33,968       33,803  
Equity securities
    61,865       59,819  
Other
    18,943       19,333  
Receivables
    19,577       20,917  
Inventories
    7,564       7,101  
Property, plant and equipment
    15,686       15,741  
Goodwill
    27,948       27,891  
Other
    13,790       13,529  
      237,742       232,901  
                 
Railroad, Utilities and Energy:
               
Cash and cash equivalents
    2,157       2,557  
Property, plant and equipment
    78,087       77,385  
Goodwill
    20,101       20,084  
Other
    13,310       13,579  
      113,655       113,605  
                 
Finance and Financial Products:
               
Cash and cash equivalents
    620       903  
Investments in fixed maturity securities
    1,057       1,080  
Other investments
    3,552       3,676  
Loans and finance receivables
    14,926       15,226  
Goodwill
    1,031       1,031  
Other
    3,913       3,807  
      25,099       25,723  
    $ 376,496     $ 372,229  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Insurance and Other:
               
Losses and loss adjustment expenses
  $ 62,391     $ 60,075  
Unearned premiums
    9,701       7,997  
Life, annuity and health insurance benefits
    8,726       8,565  
Accounts payable, accruals and other liabilities
    16,317       15,826  
Notes payable and other borrowings
    10,375       12,471  
      107,510       104,934  
                 
Railroad, Utilities and Energy:
               
Accounts payable, accruals and other liabilities
    12,059       12,367  
Notes payable and other borrowings
    31,761       31,626  
      43,820       43,993  
                 
Finance and Financial Products:
               
Accounts payable, accruals and other liabilities
    1,206       1,168  
Derivative contract liabilities
    8,087       8,371  
Notes payable and other borrowings
    14,410       14,477  
      23,703       24,016  
Income taxes, principally deferred
    37,198       36,352  
Total liabilities
    212,231       209,295  
                 
Shareholders’ equity:
               
Common stock
    8       8  
Capital in excess of par value
    37,578       37,533  
Accumulated other comprehensive income
    21,764       20,583  
Retained earnings
    100,705       99,194  
Berkshire Hathaway shareholders’ equity
    160,055       157,318  
Noncontrolling interests
    4,210       5,616  
Total shareholders’ equity
    164,265       162,934  
    $ 376,496     $ 372,229  
 
See accompanying Notes to Consolidated Financial Statements
 
 
2

 
 
and Subsidiaries
 
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in millions except per share amounts)
 
   
First Quarter
 
   
2011
   
2010
 
   
(Unaudited)
 
Revenues:
           
Insurance and Other:
           
Insurance premiums earned
  $ 7,482     $ 7,426  
Sales and service revenues
    16,772       15,531  
Interest, dividend and other investment income
    1,277       1,295  
Investment gains/losses
    86       1,315  
Other-than-temporary impairment losses on investments
    (506 )      
      25,111       25,567  
                 
Railroad, Utilities and Energy:
               
Operating revenues
    7,377       5,010  
Other
    36       40  
      7,413       5,050  
                 
Finance and Financial Products:
               
Interest, dividend and other investment income
    398       401  
Investment gains/losses
    13       3  
Derivative gains/losses
    271       411  
Other
    514       605  
      1,196       1,420  
      33,720       32,037  
                 
Costs and expenses:
               
Insurance and Other:
               
Insurance losses and loss adjustment expenses
    6,018       4,186  
Life, annuity and health insurance benefits
    1,015       1,492  
Insurance underwriting expenses
    1,725       1,403  
Cost of sales and services
    13,859       12,906  
Selling, general and administrative expenses
    2,035       1,839  
Interest expense
    67       67  
      24,719       21,893  
                 
Railroad, Utilities and Energy:
               
Cost of sales and operating expenses
    5,572       3,832  
Interest expense
    425       347  
      5,997       4,179  
                 
Finance and Financial Products:
               
Interest expense
    166       179  
Other
    604       688  
      770       867  
      31,486       26,939  
                 
Earnings before income taxes
    2,234       5,098  
Income tax expense
    629       1,336  
Earnings from equity method investment
          50  
Net earnings
    1,605       3,812  
Less: Earnings attributable to noncontrolling interests
    94       179  
Net earnings attributable to Berkshire Hathaway
  $ 1,511     $ 3,633  
Average common shares outstanding *
    1,648,411       1,599,167  
Net earnings per share attributable to Berkshire Hathaway shareholders *
  $ 917     $ 2,272  


*
Average shares outstanding include average Class A common shares and average Class B common shares determined on an equivalent Class A common stock basis. Net earnings per common share attributable to Berkshire Hathaway shown above represents net earnings per equivalent Class A common share. Net earnings per Class B common share is equal to one-fifteen-hundredth (1/1,500) of such amount.

See accompanying Notes to Consolidated Financial Statements
 
 
3

 
 
and Subsidiaries
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
 
   
First Quarter
 
   
2011
   
2010
 
   
(Unaudited)
 
Cash flows from operating activities:
           
Net earnings
  $ 1,605     $ 3,812  
Adjustments to reconcile net earnings to operating cash flows:
               
Investment (gains) losses and other-than-temporary impairment losses
    407       (1,318 )
Depreciation
    1,135       915  
Other
    121       98  
Changes in operating assets and liabilities before business acquisitions:
               
Losses and loss adjustment expenses
    1,814       153  
Deferred charges reinsurance assumed
    50       117  
Unearned premiums
    1,669       1,274  
Receivables and originated loans
    (2,737 )     (3,013 )
Derivative contract assets and liabilities
    (281 )     (632 )
Income taxes
    182       583  
Other assets and liabilities
    (463 )     1,324  
Net cash flows from operating activities
    3,502       3,313  
                 
Cash flows from investing activities:
               
Purchases of fixed maturity securities
    (1,452 )     (1,951 )
Purchases of equity securities
    (834 )     (1,644 )
Sales of fixed maturity securities
    867       1,109  
Redemptions and maturities of fixed maturity securities
    1,665       1,031  
Sales of equity securities
    9       2,283  
Redemptions of other investments
    3,845        
Purchases of loans and finance receivables
    (1,037 )     (82 )
Principal collections on loans and finance receivables
    1,289       174  
Acquisitions of businesses, net of cash acquired
    (131 )     (14,911 )
Purchases of property, plant and equipment
    (1,482 )     (1,170 )
Other
    122       (210 )
Net cash flows from investing activities
    2,861       (15,371 )
                 
Cash flows from financing activities:
               
Proceeds from borrowings of insurance and other businesses
    37       8,036  
Proceeds from borrowings of railroad, utilities and energy businesses
    191        
Proceeds from borrowings of finance businesses
    1,525       1,037  
Repayments of borrowings of insurance and other businesses
    (2,143 )     (90 )
Repayments of borrowings of railroad, utilities and energy businesses
    (276 )     (54 )
Repayments of borrowings of finance businesses
    (1,590 )     (1,588 )
Change in short term borrowings, net
    210       (62 )
Acquisitions of noncontrolling interests and other
    (1,513 )     (85 )
Net cash flows from financing activities
    (3,559 )     7,194  
Effects of foreign currency exchange rate changes
    147       (24 )
Increase (decrease) in cash and cash equivalents
    2,951       (4,888 )
Cash and cash equivalents at beginning of year *
    38,227       30,558  
Cash and cash equivalents at end of first quarter *
  $ 41,178     $ 25,670  
                 
* Cash and cash equivalents are comprised of the following:
               
Beginning of year—
               
Insurance and Other
  $ 34,767     $ 28,223  
Railroad, Utilities and Energy
    2,557       429  
Finance and Financial Products
    903       1,906  
    $ 38,227     $ 30,558  
                 
End of first quarter—
               
Insurance and Other
  $ 38,401     $ 22,720  
Railroad, Utilities and Energy
    2,157       1,756  
Finance and Financial Products
    620       1,194  
    $ 41,178     $ 25,670  
 
See accompanying Notes to Consolidated Financial Statements
 
 
4

 
 
and Subsidiaries
 
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(dollars in millions)
 
   
Berkshire Hathaway shareholders’ equity
       
   
Common stock
and capital in
excess of par
value
   
Accumulated
other
comprehensive
income
   
Retained
earnings
   
Total
   
Non-
controlling
interests
 
Balance at December 31, 2009
  $ 27,082     $ 17,793     $ 86,227     $ 131,102     $ 4,683  
Net earnings
                3,633       3,633       179  
Other comprehensive income, net
          1,513             1,513       20  
Issuance of common stock and other transactions
    10,974                   10,974        
Changes in noncontrolling interests:
                                       
Interests acquired and other transactions
    (14 )     1             (13 )     (167 )
Balance at March 31, 2010
  $ 38,042     $ 19,307     $ 89,860     $ 147,209     $ 4,715  
                                         
Balance at December 31, 2010
  $ 37,541     $ 20,583     $ 99,194     $ 157,318     $ 5,616  
Net earnings
                1,511       1,511       94  
Other comprehensive income, net
          1,185             1,185       5  
Issuance of common stock and other transactions
    58                   58        
Changes in noncontrolling interests:
                                       
Interests acquired and other transactions
    (13 )     (4 )           (17 )     (1,505 )
Balance at March 31, 2011
  $ 37,586     $ 21,764     $ 100,705     $ 160,055     $ 4,210  
 

(Unaudited)
(dollars in millions)

   
First Quarter
 
   
2011
   
2010
 
Comprehensive income attributable to Berkshire Hathaway:
           
Net earnings
  $ 1,511     $ 3,633  
                 
Other comprehensive income:
               
Net change in unrealized appreciation of investments
    652       3,130  
Applicable income taxes
    (217 )     (1,110 )
Reclassification of investment appreciation in earnings
    433       (335 )
Applicable income taxes
    (152     117  
Foreign currency translation
    439       (435 )
Applicable income taxes
    (13 )      
Prior service cost and actuarial gains/losses of defined benefit plans
    (4 )     51  
Applicable income taxes
          (13 )
Other, net
    47       108  
Other comprehensive income, net
    1,185       1,513  
Comprehensive income attributable to Berkshire Hathaway
  $ 2,696     $ 5,146  
Comprehensive income of noncontrolling interests
  $ 99     $ 199  
 
See accompanying Notes to Consolidated Financial Statements
 
 
5

 
 
and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
 
Note 1.    General
 
The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc. (“Berkshire” or “Company”) consolidated with the accounts of all its subsidiaries and affiliates in which Berkshire holds controlling financial interests as of the financial statement date. In these notes the terms “us,” “we,” or “our” refer to Berkshire and its consolidated subsidiaries.  Reference is made to Berkshire’s most recently issued Annual Report on Form 10-K (“Annual Report”) that included information necessary or useful to understanding Berkshire’s businesses and financial statement presentations. Our significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in the Annual Report. Certain immaterial amounts in 2010 have been reclassified to conform with the current year presentation. Financial information in this Report reflects any adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with accounting principles generally accepted in the United States (“GAAP”).
 
For a number of reasons, our results for interim periods are not normally indicative of results to be expected for the year. The timing and magnitude of catastrophe losses incurred by insurance subsidiaries and the estimation error inherent to the process of determining liabilities for unpaid losses of insurance subsidiaries can be relatively more significant to results of interim periods than to results for a full year. Variations in the amounts and timing of investment gains/losses can cause significant variations in periodic net earnings. Investment gains/losses are recorded when investments are sold or are other-than-temporarily impaired. In addition, changes in the fair value of derivative assets/liabilities associated with derivative contracts that do not qualify for hedge accounting treatment can cause significant variations in periodic net earnings.
 
Note 2.    New accounting pronouncements
 
In October 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-26, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts.” ASU 2010-26 modifies the types of costs incurred by insurance entities that are deferred in the acquiring or renewing of insurance contracts. ASU 2010-26 requires that only direct incremental costs related to successful efforts are capitalized. Capitalized costs may include certain advertising costs which are allowed to be capitalized if the primary purpose of the advertising is to elicit sales to customers proven to have responded directly to the advertising and the probable future revenues generated from the advertising are proven to be in excess of expected future costs to be incurred in realizing those revenues. ASU 2010-26 is effective for fiscal years and interim periods beginning after December 15, 2011 and may be applied on a prospective or retrospective basis. We are evaluating the effect that the adoption of ASU 2010-26 will have on our Consolidated Financial Statements.
 
In December 2010, the FASB issued ASU 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” ASU 2010-28 modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, Step 2 of the goodwill impairment test is required if it is more likely than not that a goodwill impairment exists, after considering whether there are any adverse qualitative factors indicating that an impairment may exist. ASU 2010-28 is effective prospectively for fiscal years and interim periods beginning after December 15, 2011. We do not anticipate the adoption of ASU 2010-28 will have a material impact on our Consolidated Financial Statements.
 
Note 3.    Significant business acquisitions
 
Our long-held acquisition strategy is to purchase businesses with consistent earning power, good returns on equity and able and honest management at sensible prices.
 
On February 12, 2010, we acquired all of the outstanding common stock of the Burlington Northern Santa Fe Corporation that we did not already own (about 264.5 million shares or 77.5%) for aggregate consideration of $26.5 billion that consisted of cash of approximately $15.9 billion with the remainder in Berkshire common stock (80,931 Class A shares and 20,976,621 Class B shares). Approximately 50% of the cash component was funded with existing cash balances and the remaining 50% was funded with proceeds from debt issued by Berkshire. The acquisition was completed through the merger of a wholly-owned merger subsidiary (a Delaware limited liability company) and Burlington Northern Santa Fe Corporation. The merger subsidiary was the surviving entity and was renamed Burlington Northern Santa Fe, LLC (“BNSF”). BNSF is based in Fort Worth, Texas, and through BNSF Railway Company operates one of the largest railroad systems in North America with approximately 32,000 route miles (including 23,000 route miles of track owned by BNSF) of track in 28 states and two Canadian provinces.
 
 
6

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 3.    Significant business acquisitions (Continued)
 
Prior to February 12, 2010, we owned 76.8 million shares of BNSF (22.5% of the outstanding shares), which were acquired between August 2006 and January 2009. We accounted for those shares pursuant to the equity method and as of February 12, 2010, our investment had a carrying value of $6.6 billion. We are accounting for the acquisition of BNSF pursuant to the acquisition method under Accounting Standards Codification Section 805 Business Combinations (“ASC 805”). Upon completion of the acquisition of the remaining BNSF shares, we were required under ASC 805 to re-measure our previously owned investment in BNSF at fair value as of the acquisition date. In the first quarter of 2010, we recognized a one-time holding gain of approximately $1 billion for the difference between the fair value of the BNSF shares and our carrying value under the equity method. BNSF’s financial statements are included in our Consolidated Financial Statements beginning as of February 13, 2010.
 
In the first quarter of 2011, we acquired 16.5% of the outstanding common stock of Marmon Holdings, Inc. (“Marmon”) for approximately $1.5 billion in cash, thus increasing our ownership to 80.2%.  We have owned a controlling interest in Marmon since 2008. We increased our interests in the underlying assets and liabilities of Marmon; however, under current GAAP, the excess of the purchase price over the carrying value of the noncontrolling interests acquired is not allocable to assets or liabilities. Accordingly, we recorded a charge of approximately $600 million to capital in excess of par value in our consolidated shareholders’ equity on December 31, 2010 in connection with this transaction.
 
On March 13, 2011, Berkshire and The Lubrizol Corporation (“Lubrizol”) entered into a merger agreement, whereby Berkshire will acquire all of the outstanding shares of Lubrizol common stock for cash of $135 per share. The aggregate merger consideration is expected to be approximately $9.0 billion. The acquisition is subject to the approval of Lubrizol shareholders and is also subject to various regulatory approvals and other customary closing conditions. The acquisition is currently expected to close in the third quarter of 2011.
 
Lubrizol is an innovative specialty chemical company that produces and supplies technologies to customers in the global transportation, industrial and consumer markets. These technologies include lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as fuel additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and pharmaceuticals; specialty materials, including plastics technology; and performance coatings in the form of specialty resins and additives. Lubrizol’s industry-leading technologies in additives, ingredients and compounds enhance the quality, performance and value of customers’ products, while reducing their environmental impact. For the year ended December 31, 2010, Lubrizol reported consolidated revenues of $5.4 billion and net earnings of $732 million.
 
Note 4.    Investments in fixed maturity securities
 
Investments in securities with fixed maturities as of March 31, 2011 and December 31, 2010 are summarized below (in millions).
 
   
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Fair
Value
 
March 31, 2011
                       
U.S. Treasury, U.S. government corporations and agencies
  $ 2,110     $ 38     $ (2 )   $ 2,146  
States, municipalities and political subdivisions
    3,220       217             3,437  
Foreign governments
    12,201       196       (70 )     12,327  
Corporate bonds
    11,688       2,473       (41 )     14,120  
Mortgage-backed securities
    2,702       303       (10 )     2,995  
    $ 31,921     $ 3,227     $ (123 )   $ 35,025  
Insurance and other
  $ 30,963     $ 3,128     $ (123 )   $ 33,968  
Finance and financial products
    958       99             1,057  
    $ 31,921     $ 3,227     $ (123 )   $ 35,025  
                                 
December 31, 2010
                               
U.S. Treasury, U.S. government corporations and agencies
  $ 2,151     $ 48     $ (2 )   $ 2,197  
States, municipalities and political subdivisions
    3,356       225             3,581  
Foreign governments
    11,721       242       (51 )     11,912  
Corporate bonds
    11,773       2,304       (23 )     14,054  
Mortgage-backed securities
    2,838       312       (11 )     3,139  
    $ 31,839     $ 3,131     $ (87 )   $ 34,883  
Insurance and other
  $ 30,862     $ 3,028     $ (87 )   $ 33,803  
Finance and financial products
    977       103             1,080  
    $ 31,839     $ 3,131     $ (87 )   $ 34,883  
 
 
7

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 4.    Investments in fixed maturity securities (Continued)
 
As of March 31, 2011, the fair value of investments that have been in a continuous unrealized loss position for more than 12 months was $389 million and the unrealized loss was approximately $22 million.  As of December 31, 2010, investments that were in a continuous unrealized loss position for more than 12 months had unrealized losses of $24 million.
 
The amortized cost and estimated fair value of securities with fixed maturities at March 31, 2011 are summarized below by contractual maturity dates. Actual maturities will differ from contractual maturities because issuers of certain of the securities retain early call or prepayment rights. Amounts are in millions.
 
   
Due in one
year or  less
   
Due after one
year  through
five years
   
Due after five
years  through
ten years
   
Due after
ten years
   
Mortgage-backed
securities
   
Total
 
Amortized cost
  $ 7,273     $ 14,632     $ 4,497     $ 2,817     $ 2,702     $ 31,921  
Fair value
    7,396       15,985       5,240       3,409       2,995       35,025  
 
Note 5.    Investments in equity securities
 
Investments in equity securities as of March 31, 2011 and December 31, 2010 are summarized below (in millions).
 
   
Cost Basis
   
Unrealized
Gains
   
Unrealized
Losses
   
Fair
Value
 
March 31, 2011
                       
American Express Company
  $ 1,287     $ 5,566     $     $ 6,853  
The Coca-Cola Company
    1,299       11,969             13,268  
The Procter & Gamble Company
    4,321       138             4,459  
Wells Fargo & Company
    7,678       3,704             11,382  
Other
    21,344       6,087       (154 )     27,277  
    $ 35,929     $ 27,464     $ (154 )   $ 63,239  
                                 
Insurance and other
  $ 35,261     $ 26,758     $ (154 )   $ 61,865  
Railroad, utilities and energy *
    232       630             862  
Finance and financial products *
    436       76             512  
    $ 35,929     $ 27,464     $ (154 )   $ 63,239  
                                 
December 31, 2010
                               
American Express Company
  $ 1,287     $ 5,220     $     $ 6,507  
The Coca-Cola Company
    1,299       11,855             13,154  
The Procter & Gamble Company
    4,321       336             4,657  
Wells Fargo & Company
    8,015       3,521       (413 )     11,123  
Other
    20,622       5,709       (259 )     26,072  
    $ 35,544     $ 26,641     $ (672 )   $ 61,513  
                                 
Insurance and other
  $ 34,875     $ 25,616     $ (672 )   $ 59,819  
Railroad, utilities and energy *
    232       950             1,182  
Finance and financial products *
    437       75             512  
    $ 35,544     $ 26,641     $ (672 )   $ 61,513  


*
Included in Other assets.
 
As of March 31, 2011, there were no unrealized losses on equity investments that were in a continuous loss position for more than twelve months and for which other-than-temporary impairment losses were not recorded.  As of December 31, 2010 such unrealized losses were $531 million.
 
 
8

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 5.    Investments in equity securities (Continued)
 
During the first quarter of 2011, we recorded other-than-temporary impairment (“OTTI”) losses in earnings of $506 million related to certain equity securities. The charge to earnings was offset by a reduction in unrealized losses recorded in other comprehensive income resulting in no impact on our consolidated shareholders’ equity. Included in the OTTI losses was $337 million related to 103.6 million shares of our Wells Fargo & Company investment. These shares had an aggregate original cost of $3,621 million. We also hold an additional 255.4 million shares of Wells Fargo which were acquired at an aggregate cost of $4,394 million. These shares had an unrealized gain of $3,704 million as of March 31, 2011. Due to the length of time that certain of our Wells Fargo shares were in a continuous unrealized loss position and because we account for gains and losses on a specific identification basis, accounting regulations required us to record the unrealized losses in earnings. However, the unrealized gains are not reflected in earnings but are instead recorded directly in shareholders’ equity as a component of accumulated other comprehensive income.
 
Note 6.    Other Investments
 
Other investments include fixed maturity and equity securities of The Goldman Sachs Group, Inc. (“GS”), General Electric Company (“GE”), Wm. Wrigley Jr. Company (“Wrigley”) and The Dow Chemical Company (“Dow”). A summary of other investments follows (in millions).
 
   
Cost
   
Unrealized
Gains
   
Fair
Value
   
Carrying
Value
 
March 31, 2011
                       
Other fixed maturity and equity securities:
                       
Insurance and other
  $ 15,506     $ 4,512     $ 20,018     $ 18,943  
Finance and financial products
    2,742       823       3,565       3,552  
    $ 18,248     $ 5,335     $ 23,583     $ 22,495  
                                 
December 31, 2010
                               
Other fixed maturity and equity securities:
                               
Insurance and other
  $ 15,700     $ 4,758     $ 20,458     $ 19,333  
Finance and financial products
    2,742       947       3,689       3,676  
    $ 18,442     $ 5,705     $ 24,147     $ 23,009  
 
In 2008, we acquired 50,000 shares of 10% Cumulative Perpetual Preferred Stock of GS (“GS Preferred”) and warrants to purchase 43,478,260 shares of common stock of GS (“GS Warrants”) for a combined cost of $5 billion. Under its terms, the GS Preferred is redeemable at any time by GS at a price of $110,000 per share ($5.5 billion in aggregate). In March 2011, GS notified us that it would redeem our GS Preferred investment in its entirety and on April 18, 2011, we received the redemption proceeds of $5.5 billion. The GS Warrants remain outstanding and expire in 2013 and can be exercised for an aggregate cost of $5 billion ($115/share). In 2008, we also acquired 30,000 shares of 10% Cumulative Perpetual Preferred Stock of GE (“GE Preferred”) and warrants to purchase 134,831,460 shares of common stock of GE (“GE Warrants”) for a combined cost of $3 billion. The GE Preferred may be redeemed by GE beginning in October 2011 at a price of $110,000 per share ($3.3 billion in aggregate). The GE Warrants expire in 2013 and can be exercised for an additional aggregate cost of $3 billion ($22.25/share).
 
In 2008, we acquired $4.4 billion par amount of 11.45% Wrigley subordinated notes due in 2018 and $2.1 billion of 5% Wrigley preferred stock. In 2009, we also acquired $1.0 billion par amount of Wrigley senior notes due in 2013 and 2014. We currently own $800 million of the Wrigley senior notes. The Wrigley subordinated and senior notes are classified as held-to-maturity and we carry these investments at cost, adjusted for foreign currency exchange rate changes that apply to certain of the senior notes. We carry the Wrigley preferred stock at fair value classified as available-for-sale.
 
In 2009, we acquired 3,000,000 shares of Series A Cumulative Convertible Perpetual Preferred Stock of Dow (“Dow Preferred”) for a cost of $3 billion. Under certain conditions, we can convert each share of the Dow Preferred into 24.201 shares (equivalent to a conversion price of $41.32 per share) of Dow common stock. Beginning in April 2014, if Dow’s common stock price exceeds $53.72 per share for any 20 trading days in a consecutive 30-day window, Dow, at its option, at any time, in whole or in part, may convert the Dow Preferred into Dow common stock at the then applicable conversion rate. The Dow Preferred is entitled to dividends at a rate of 8.5% per annum.
 
 
9

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 7.    Investment gains/losses
 
Investment gains/losses are summarized below (in millions).
 
   
First Quarter
 
   
2011
   
2010
 
Fixed maturity securities —
           
Gross gains from sales and other disposals
  $ 82     $ 298  
Gross losses from sales and other disposals
          (3 )
Equity securities —
               
Gross gains from sales and other disposals
    1       212  
Gross losses from sales and other disposals
    (10 )     (172 )
Other
    26       983 *
    $ 99     $ 1,318  
Net investment gains/losses are reflected in the Consolidated Statements of Earnings as follows.
 
Insurance and other
  $ 86     $ 1,315
Finance and financial products
    13       3  
    $ 99     $ 1,318  
 

*
Includes a one-time holding gain of $979 million related to the BNSF acquisition.  See Note 3.
 
Note 8.    Receivables
 
Receivables of insurance and other businesses are comprised of the following (in millions).
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
Insurance premiums receivable
  $ 7,726     $ 6,342  
Reinsurance recoverable on unpaid losses
    2,960       2,735  
Trade and other receivables
    9,279       12,223  
Allowances for uncollectible accounts
    (388 )     (383 )
    $ 19,577     $ 20,917  
 
As of December 31, 2010, trade and other receivables included approximately CHF 3.7 billion ($3.9 billion) related to the redemption of the Swiss Re convertible capital instrument. This receivable was collected on January 10, 2011.
 
Loans and finance receivables of finance and financial products businesses are comprised of the following (in millions).
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
Consumer installment loans and finance receivables
  $ 13,860     $ 14,042  
Commercial loans and finance receivables
    1,440       1,557  
Allowances for uncollectible loans
    (374 )     (373 )
    $ 14,926     $ 15,226  
 
Allowances for uncollectible loans primarily relate to consumer installment loans. Provisions for consumer loan losses were $82 million in the first quarter of 2011 and $88 million for the first quarter of 2010. Loan charge-offs, net of recoveries, were $81 million in the first quarter of 2011 and $84 million for the first quarter of 2010. Consumer loan amounts are net of acquisition discounts of $567 million at March 31, 2011 and $580 million at December 31, 2010. At March 31, 2011, approximately 96% of consumer installment loan balances were evaluated collectively for impairment whereas about 91% of commercial loan balances were evaluated individually for impairment.
 
As a part of the evaluation process, credit quality indicators are reviewed and loans are designated as performing or non-performing. At March 31, 2011, approximately 98% of consumer installment and commercial loan balances were determined to be performing and approximately 94% of those balances were current as to payment status.
 
 
10

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 9.    Inventories
 
Inventories are comprised of the following (in millions).
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
Raw materials
  $ 1,168     $ 1,066  
Work in process and other
    629       509  
Finished manufactured goods
    2,320       2,180  
Goods acquired for resale
    3,447       3,346  
    $ 7,564     $ 7,101  
 
Note 10.    Goodwill and other intangible assets
 
A reconciliation of the change in the carrying value of goodwill is as follows (in millions).
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
Balance at beginning of year
  $ 49,006     $ 33,972  
Acquisition of BNSF
          14,803  
Other
    74       231  
Balance at end of year
  $ 49,080     $ 49,006  
 
Intangible assets other than goodwill are included in other assets and are summarized as follows (in millions).
 
   
March 31, 2011
   
December 31, 2010
 
   
Gross carrying
amount
   
Accumulated
amortization
   
Gross carrying
amount
   
Accumulated
amortization
 
Insurance and other
  $ 6,977     $ 1,927     $ 6,944     $ 1,816  
Railroad, utilities and energy
    2,082       384       2,082       306  
    $ 9,059     $ 2,311     $ 9,026     $ 2,122  
                                 
Trademarks and trade names
  $ 2,030     $ 178     $ 2,027     $ 166  
Patents and technology
    2,942       1,111       2,922       1,013  
Customer relationships
    2,673       659       2,676       612  
Other
    1,414       363       1,401       331  
    $ 9,059     $ 2,311     $ 9,026     $ 2,122  
 
Amortization expense was $183 million for the first three months of 2011 and $159 million for the first three months of 2010. Intangible assets with indefinite lives as of March 31, 2011 and December 31, 2010 were $1,635 million.
 
 
11

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 11.    Property, plant and equipment
 
Property, plant and equipment of our insurance and other businesses is comprised of the following (in millions).
 
   
Ranges of
estimated useful  life
   
March 31,
2011
   
December 31,
2010
 
Land
      $ 750     $ 744  
Buildings and improvements
 
3 – 40 years
      4,709       4,661  
Machinery and equipment
 
3 – 25 years
      11,647       11,573  
Furniture, fixtures and other
 
3 – 20 years
      2,061       1,932  
Assets held for lease
 
12 –30 years
      5,776       5,832  
            24,943       24,742  
Accumulated depreciation
          (9,257 )     (9,001 )
          $ 15,686     $ 15,741  
 
Depreciation expense of insurance and other businesses for the first quarter of 2011 and 2010 was $426 million and $380 million, respectively.
 
Property, plant and equipment of our railroad, utilities and energy businesses is comprised of the following (in millions).
 
   
Ranges of
estimated useful  life
   
March 31,
2011
   
December 31,
2010
 
Railroad:
                 
Land
      $ 5,900     $ 5,901  
Track structure and other roadway
 
5 – 100 years
      35,775       35,463  
Locomotives, freight cars and other equipment
 
5 – 37 years
      4,400       4,329  
Construction in progress
        638       453  
Utilities and energy:
                     
Utility generation, distribution and transmission system
 
5 – 85 years
      38,031       37,643  
Interstate pipeline assets
 
3 – 67 years
      5,933       5,906  
Independent power plants and other assets
 
3 – 30 years
      1,103       1,097  
Construction in progress
        1,630       1,456  
            93,410       92,248  
Accumulated depreciation
          (15,323 )     (14,863 )
          $ 78,087     $ 77,385  
 
The utility generation, distribution and transmission system and interstate pipeline assets are the regulated assets of public utility and natural gas pipeline subsidiaries. Depreciation expense of the railroad, utilities and energy businesses for the first quarter of 2011 and 2010 was $696 million and $483 million, respectively. Depreciation expense of the railroad business (BNSF) in the first quarter of 2010 includes expenses from February 13, 2010 through March 31, 2010.
 
 
12

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 12.    Derivative contracts
 
Derivative contracts are used primarily by our finance and financial products businesses and our railroad, utilities and energy businesses. As of March 31, 2011 and December 31, 2010, substantially all of the derivative contracts of our finance and financial products businesses are not designated as hedges for financial reporting purposes. These contracts were initially entered into with the expectation that the premiums received would exceed the amounts ultimately paid to counterparties. Changes in the fair values of such contracts are reported in earnings as derivative gains/losses. A summary of derivative contracts of our finance and financial products businesses follows (in millions).
 
   
March 31, 2011
   
December 31, 2010
 
   
Assets (3)
   
Liabilities
   
Notional
Value
   
Assets (3)
   
Liabilities
   
Notional
Value
 
Equity index put options
  $     $ 6,489     $ 34,489 (1)   $     $ 6,712     $ 33,891 (1)
Credit default obligations:
                                               
High yield indexes
          114       4,893 (2)           159       4,893 (2)
States/municipalities
          1,165       16,042 (2)           1,164       16,042 (2)
Individual corporate
    93             3,565 (2)     84             3,565 (2)
Other
    350       355               341       375          
Counterparty netting
    (75 )     (36 )             (82 )     (39 )        
    $ 368     $ 8,087             $ 343     $ 8,371          
 

(1)
Represents the aggregate undiscounted amount payable at the contract expiration dates assuming that the value of each index is zero at the contract expiration date.
 
(2)
Represents the maximum undiscounted future value of losses payable under the contracts. The number of losses required to exhaust contract limits under substantially all of the contracts is dependent on the loss recovery rate related to the specific obligor at the time of a default.
 
(3)
Included in Other assets of finance and financial products businesses.
 
A summary of derivative gains/losses of our finance and financial products businesses included in the Consolidated Statements of Earnings are as follows (in millions).
 
   
First Quarter
 
   
2011
   
2010
 
Equity index put options
  $ 223     $ 178  
Credit default obligations
    70       208  
Other
    (22 )     25  
    $ 271     $ 411  
 
The equity index put option contracts are European style options written on four major equity indexes. Future payments, if any, under these contracts will be required if the underlying index value is below the strike price at the contract expiration dates which occur between June 2018 and January 2026. We received the premiums on these contracts in full at the contract inception dates and therefore we have no counterparty credit risk. We entered into no new contracts in 2010 or 2011.
 
At March 31, 2011, the aggregate intrinsic value (the undiscounted liability assuming the contracts are settled on their future expiration dates based on the March 31, 2011 index values and foreign currency exchange rates) was approximately $3.7 billion. However, these contracts may not be unilaterally terminated or fully settled before the expiration dates and therefore the ultimate amount of cash basis gains or losses on these contracts may not be determined for many years. The remaining weighted average life of all contracts was approximately 9.75 years at March 31, 2011.
 
Our credit default contracts pertain to various indexes of non-investment grade (or “high yield”) corporate issuers, state/municipal debt issuers and other individual corporate issuers. These contracts cover the loss in value of specified debt obligations of the issuers arising from default events, which are usually from their failure to make payments or bankruptcy. Loss amounts are subject to aggregate contract limits. We entered into no new contracts in 2010 or 2011.
 
 
13

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 12.    Derivative contracts (Continued)
 
The high yield index contracts are comprised of specified North American corporate issuers (usually 100 in number at inception) whose obligations are rated below investment grade. High yield contracts remaining in-force at March 31, 2011 expire no later than 2013. State and municipality contracts are comprised of over 500 state and municipality issuers and had a weighted average contract life at March 31, 2011 of approximately 9.9 years. Potential obligations related to approximately 50% of the notional value of the state and municipality contracts cannot be settled before the maturity dates of the underlying obligations, which range from 2019 to 2054.
 
Premiums on the high yield index and state/municipality contracts are received in full at the inception dates of the contracts and, as a result, we have no counterparty credit risk. Our payment obligations under certain of these contracts are on a first loss basis. Losses under other contracts are subject to aggregate deductibles that must be satisfied before we have any payment obligations.
 
Individual corporate credit default contracts primarily relate to issuers of investment grade obligations. In most instances, premiums are due from counterparties on a quarterly basis over the terms of the contracts. As of March 31, 2011, all of the remaining contracts in-force will expire in 2013.
 
With limited exceptions, our equity index put option and credit default contracts contain no collateral posting requirements with respect to changes in either the fair value or intrinsic value of the contracts and/or a downgrade of Berkshire’s credit ratings. As of March 31, 2011, our collateral posting requirement under contracts with collateral provisions was $20 million compared to $31 million at December 31, 2010. As of March 31, 2011, had Berkshire’s credit ratings (currently AA+ from Standard & Poor’s and Aa2 from Moody’s) been downgraded below either A- by Standard & Poor’s or A3 by Moody’s an additional $1.1 billion would have been required to be posted as collateral.
 
Our railroad and regulated utility subsidiaries are exposed to variations in the market prices in the purchases and sales of natural gas and electricity and in the purchase of fuel. Derivative instruments, including forward purchases and sales, futures, swaps and options, are used to manage these price risks. Unrealized gains and losses under the contracts of our regulated utilities that are probable of recovery through rates are recorded as a regulatory net asset or liability. Unrealized gains or losses on contracts accounted for as cash flow or fair value hedges are recorded in accumulated other comprehensive income or in net earnings, as appropriate. Derivative contract assets included in other assets of railroad, utilities and energy businesses were $252 million and $231 million as of March 31, 2011 and December 31, 2010, respectively. Derivative contract liabilities included in accounts payable, accruals and other liabilities of railroad, utilities and energy businesses were $572 million as of March 31, 2011 and $621 million as of December 31, 2010.
 
 
14

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 13.    Supplemental cash flow information
 
A summary of supplemental cash flow information for the first quarter of 2011 and 2010 is presented in the following table (in millions).
 
   
First Quarter
 
   
2011
   
2010
 
Cash paid during the period for:
           
Income taxes
  $ 231     $ 310  
Interest of insurance and other businesses
    79       38  
Interest of railroad, utilities and energy businesses
    482       374  
Interest of finance and financial products businesses
    174       194  
                 
Non-cash investing and financing activities:
               
Liabilities assumed in connection with acquisition of BNSF
          30,968  
Common stock issued in connection with acquisition of BNSF
          10,577  
 
Note 14.    Notes payable and other borrowings
 
Notes payable and other borrowings are summarized below (in millions). The average interest rates shown in the following tables are the weighted average interest rates on outstanding debt as of March 31, 2011. Maturity date ranges are based on borrowings as of March 31, 2011.
 
   
Average
Interest Rate
 
March 31,
2011
   
December 31,
2010
 
Insurance and other:
                 
Issued by Berkshire parent company due 2012-2047
    1.9 %   $ 6,287     $ 8,360  
Short-term subsidiary borrowings
    0.4 %     1,680       1,682  
Other subsidiary borrowings due 2011-2036
    5.2 %     2,408       2,429  
            $ 10,375     $ 12,471  
 
In connection with the BNSF acquisition, the Berkshire parent company issued $8.0 billion aggregate par amount of senior unsecured notes, including $2.0 billion par amount of floating rate notes that matured in February 2011.
 
   
Average
Interest Rate
 
March 31,
2011
   
December 31,
2010
 
Railroad, utilities and energy:
                 
Issued by MidAmerican Energy Holdings Company (“MidAmerican”) and its subsidiaries:
                 
MidAmerican senior unsecured debt due 2012-2037
    6.1 %   $ 5,371     $ 5,371  
Subsidiary and other debt due 2011-2039
    5.7 %     14,511       14,275  
Issued by BNSF due 2011-2097
    6.1 %     11,879       11,980  
            $ 31,761     $ 31,626  
 
MidAmerican subsidiary debt represents amounts issued pursuant to separate financing agreements. All or substantially all of the assets of certain MidAmerican subsidiaries are or may be pledged or encumbered to support or otherwise secure the debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios. BNSF’s borrowings are primarily unsecured. As of March 31, 2011, BNSF and MidAmerican and its subsidiaries were in compliance with all applicable covenants. Berkshire does not guarantee any debt or other borrowings of BNSF, MidAmerican or their subsidiaries.
 
   
Average
Interest Rate
 
March 31,
2011
   
December 31,
2010
 
Finance and financial products:
                 
Issued by Berkshire Hathaway Finance Corporation (“BHFC”) due 2012-2040
    4.3 %   $ 11,528     $ 11,535  
Issued by other subsidiaries due 2011-2036
    5.0 %     2,882       2,942  
            $ 14,410     $ 14,477  
 
 
15

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 14.    Notes payable and other borrowings (Continued)
 
BHFC is a 100% owned finance subsidiary of Berkshire, which has fully and unconditionally guaranteed its securities. In January 2011, BHFC issued an additional $1.5 billion par amount of notes and repaid $1.5 billion of maturing notes. The new notes are unsecured and are comprised of $750 million par amount of 4.25% senior notes due in 2021, $375 million par amount of 1.5% senior notes due in 2014 and $375 million par amount of floating rate senior notes due in 2014.
 
Our subsidiaries have approximately $5.3 billion of available unused lines of credit and commercial paper capacity in the aggregate at March 31, 2011, to support our short-term borrowing programs and provide additional liquidity. Generally, Berkshire’s guarantee of a subsidiary’s debt obligation is an absolute, unconditional and irrevocable guarantee for the full and prompt payment when due of all present and future payment obligations.
 
Note 15.    Fair value measurements
 
The estimated fair values of our financial instruments are shown in the following table (in millions). The carrying values of cash and cash equivalents, accounts receivable and accounts payable, accruals and other liabilities are deemed to be reasonable estimates of their fair values.
 
   
Carrying Value
   
Fair Value
 
   
March 31,
2011
   
December 31,
2010
   
March 31,
2011
   
December 31,
2010
 
Investments in fixed maturity securities
  $ 35,025     $ 34,883     $ 35,025     $ 34,883  
Investments in equity securities
    63,239       61,513       63,239       61,513  
Other investments
    22,495       23,009       23,583       24,147  
Loans and finance receivables
    14,926       15,226       14,165       14,453  
Derivative contract assets (1) 
    620       574       620       574  
Notes payable and other borrowings:
                               
Insurance and other
    10,375       12,471       10,573       12,705  
Railroad, utilities and energy
    31,761       31,626       33,609       33,932  
Finance and financial products
    14,410       14,477       15,107       15,191  
Derivative contract liabilities:
                               
Railroad, utilities and energy (2) 
    572       621       572       621  
Finance and financial products
    8,087       8,371       8,087       8,371  


(1)
Included in Other assets
 
(2)
Included in Accounts payable, accruals and other liabilities
 
Fair values for substantially all of our financial instruments were measured using market or income approaches. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in an actual current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value.
 
The hierarchy for measuring fair value consists of Levels 1 through 3.
 
Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets. Substantially all of our equity investments are traded on an exchange in active markets and fair values are based on the closing prices as of the balance sheet date.
 
Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Fair values for our investments in fixed maturity securities are primarily based on price evaluations which incorporate market prices for identical instruments in inactive markets and market data available for instruments with similar characteristics. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit rating, estimated duration, and yields for other instruments of the issuer or entities in the same industry sector.
 
 
16

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 15.    Fair value measurements (Continued)
 
Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities or related observable inputs that can be corroborated at the measurement date. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities. Measurements of non-exchange traded derivative contracts and certain other investments carried at fair value are based primarily on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. We value equity index put option contracts based on the Black-Scholes option valuation model which we believe is widely used by market participants. Inputs to this model include current index price, expected volatility, dividend and interest rates and contract duration. Credit default contracts are primarily valued based on indications of bid or offer data as of the balance sheet date. These contracts are not exchange traded and certain of the terms of our contracts are not standard in derivatives markets. For example, we are not required to post collateral under most of our contracts. For these reasons, we classified these contracts as Level 3.
 
Financial assets and liabilities measured and carried at fair value on a recurring basis in our financial statements are summarized, according to the hierarchy previously described, as follows (in millions).
 
   
Total
Fair Value
   
Quoted
Prices
(Level 1)
   
Significant Other
Observable Inputs
(Level 2)
   
Significant
Unobservable  Inputs
(Level 3)
 
March 31, 2011
                       
Investments in fixed maturity securities:
                       
U.S. Treasury, U.S. government corporations and agencies
  $ 2,146     $ 563     $ 1,580     $ 3  
States, municipalities and political subdivisions
    3,437             3,436       1  
Foreign governments
    12,327       5,073       7,140       114  
Corporate bonds
    14,120             13,471       649  
Mortgage-backed securities
    2,995             2,995        
Investments in equity securities
    63,239       63,108       87       44  
Other investments
    17,270             5,500       11,770  
                                 
Net derivative contract (assets)/liabilities:
                               
Railroad, utilities and energy
    320             (21 )     341  
Finance and financial products:
                               
Equity index put options
    6,489                   6,489  
Credit default obligations
    1,186                   1,186  
Other
    44             116       (72 )
                                 
December 31, 2010
                               
Investments in fixed maturity securities:
                               
U.S. Treasury, U.S. government corporations and agencies
  $ 2,197     $ 535     $ 1,658     $ 4  
States, municipalities and political subdivisions
    3,581