XML 31 R17.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Guarantees
6 Months Ended
Jun. 30, 2011
Schedule Of Guarantee Obligations [Abstract]  
Guarantees

10. Guarantees

The Company provides cardmember protection plans that cover losses associated with purchased products, as well as certain other guarantees in the ordinary course of business which are within the scope of GAAP governing the accounting for guarantees.

 

In relation to its maximum amount of undiscounted future payments as seen in the table that follows, to date the Company has not experienced any significant losses related to guarantees. The Company's initial recognition of guarantees is at fair value, which has been determined in accordance with GAAP governing fair value measurement. In addition, the Company establishes reserves when an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.

 

The following table provides information related to such guarantees as of June 30, 2011 and December 31, 2010:

  Maximum amount of  
 undiscounted futureAmount of  related
  payments(a)liability(b)
 (Billions)(Millions)
Type of Guarantee 2011 2010 2011 2010
Card and travel operations(c) $ 69 $67 $114 $ 114
Other(d)   1  1  104   99
Total $ 70 $68 $ 218 $ 213

(a)       Represents the notional amounts that could be lost under the guarantees and indemnifications if there were a total default by the guaranteed parties. The Merchant Protection guarantee is calculated using management's best estimate of maximum exposure based on all eligible claims as measured against annual billed business volumes. The Company mitigates this risk by withholding settlement from the merchant or obtaining deposits and other guarantees from merchants considered higher risk due to various factors. The amounts being held by the Company are not significant when compared to the maximum potential amount of undiscounted future payments.

(b)       Included as part of other liabilities on the Company's Consolidated Balance Sheets.

(c)       Includes Credit Card Registry, Return Protection, Account Protection and Merchant Protection, which the Company offers directly to cardmembers.

(d)       Other primarily includes guarantees related to the Company's business dispositions and real estate, each of which are individually smaller indemnifications.