Fair value measurements (Tables)

9 Months Ended

Sep. 30, 2019

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

Our financial assets and liabilities are summarized below as of September 30, 2019 and December 31, 2018, with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, U.S. Treasury Bills, receivables 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, 2019
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$	3,805	$	3,805	$	2,833	$	972	$	—
States, municipalities and political subdivisions		157		157		—		157		—
Foreign governments		8,023		8,023		5,752		2,271		—
Corporate bonds		6,704		6,704		—		6,701		3
Mortgage-backed securities		483		483		—		483		—
Investments in equity securities		220,051		220,051		209,195		51		10,805
Investment in Kraft Heinz common stock		13,770		9,091		9,091		—		—
Loans and finance receivables		17,135		17,367		—		1,758		15,609
Derivative contract assets ⁽¹⁾		144		144		—		18		126
Derivative contract liabilities:
Railroad, utilities and energy ⁽¹⁾		96		96		6		62		28
Equity index put options		1,236		1,236		—		—		1,236
Notes payable and other borrowings:
Insurance and other		37,176		40,409		—		40,381		28
Railroad, utilities and energy		65,018		76,008		—		76,008		—
December 31, 2018
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$	4,223	$	4,223	$	2,933	$	1,290	$	—
States, municipalities and political subdivisions		189		189		—		189		—
Foreign governments		7,502		7,502		5,417		2,085		—
Corporate bonds		7,440		7,440		—		7,434		6
Mortgage-backed securities		544		544		—		544		—
Investments in equity securities		172,757		172,757		172,253		203		301
Investment in Kraft Heinz common stock		13,813		14,007		14,007		—		—
Loans and finance receivables		16,280		16,377		—		1,531		14,846
Derivative contract assets ⁽¹⁾		172		172		2		52		118
Derivative contract liabilities:
Railroad, utilities and energy ⁽¹⁾		111		111		1		101		9
Equity index put options		2,452		2,452		—		—		2,452
Notes payable and other borrowings:
Insurance and other		34,975		35,361		—		35,335		26
Railroad, utilities and energy		62,515		66,422		—		66,422		—

⁽¹⁾	^{Assets are included in other assets and liabilities are included in accounts payable, accruals and other liabilities.}

Reconciliations of significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3)

Reconciliations of significant 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 ended September 30, 2019 and 2018 follow (in millions).

				Gains (losses) included in:
	Balance – beginning of year			Earnings		Other comprehensive income			Regulatory assets and liabilities			Acquisitions, dispositions and settlements			Balance – September 30
Investments in fixed maturity and equity securities:
2019	$	307		$	499	$	—		$	—		$	10,002		$	10,808
2018		6			—		—			—			(1	)		5

Net derivative contract assets (liabilities):
2019		(2,343	)		1,528		(1	)		(40	)		(282	)		(1,138	)
2018		(2,069	)		446		—			(11	)		(141	)		(1,775	)

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

Quantitative information as of September 30, 2019, 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

Investments in equity securities:

Preferred stocks

10,363

Discounted cash flow

Expected duration

10 years

Discount for transferability restrictions and subordination

375 basis points

Common stock warrants

136

Warrant pricing model

Expected duration

10 years

Derivative contract liabilities

1,236

Option pricing model

Volatility

16%