Berkshire Hathaway 2003 Annual Report Download - page 43

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Notes to Consolidated Financial Statements (Continued)
(11) Unpaid losses and loss adjustment expenses (Continued)
retroactive reinsurance contracts written by the Berkshire Hathaway Reinsurance Group. The decline in these liabilities
over the last twelve months was primarily attributed to commutations of certain contracts in 2003. Claim liabilities
arising from the retroactive contracts are subject to aggregate policy limits. Thus, Berkshire’ s exposure to
environmental and latent injury claims under these contracts is, likewise, limited. Claims paid or reserved under these
policies were approximately 86% of aggregate policy limits as of the end of 2003.
Berkshire monitors evolving case law and its effect on environmental and latent injury claims. Changing
government regulations, newly identified toxins, newly reported claims, new theories of liability, new contract
interpretations and other factors could result in significant increases in these liabilities. Such development could be
material to Berkshire’ s results of operations. It is not possible to reliably estimate the amount of additional net loss, or
the range of net loss, that is reasonably possible.
(12) Notes payable and other borrowings
Notes payable and other borrowings of Berkshire and its subsidiaries as of December 31, 2003 and 2002 are
summarized below. Amounts are in millions. 2003 2002
Insurance and other:
Issued by Berkshire:
SQUARZ notes 3% due 2007................................................................ $ 400 $ 400
Investment agreements due 2012-2033 ................................................. 632 386
Issued by subsidiaries and guaranteed by Berkshire:
Commercial paper and other short-term borrowings............................. 1,527 1,834
Other debt due 2006-2035..................................................................... 315 275
Issued by subsidiaries and not guaranteed by Berkshire:
Commercial paper and other short-term borrowings............................. 14 349
Borrowings under investment agreements due 2004-2041.................... 271 384
Other debt due 2004-2032..................................................................... 1,023 1,147
$4,182 $4,775
Finance and financial products:
Issued by subsidiaries and guaranteed by Berkshire:
Commercial paper and other short-term borrowings............................. $ 83 $ 22
3.375% notes due 2008 ......................................................................... 744 —
4.20% notes due 2010 ........................................................................... 497 —
4.625% notes due 2013 ......................................................................... 744 —
Bank borrowings due 2006.................................................................... 525 2,175
Other...................................................................................................... 201 196
Issued by subsidiaries and not guaranteed by Berkshire:
Commercial paper and other short-term borrowings............................. 80 204
Other debt due 2004-2037..................................................................... 2,063 1,916
$4,937 $4,513
Commercial paper and other short-term borrowings are obligations of certain businesses that utilize short-term
borrowings as part of financing their operations. Weighted average interest rates as of December 31, 2003 and 2002
were 1.3% and 2.4% respectively. Berkshire affiliates have approximately $6.6 billion available unused lines of credit
and commercial paper capacity to support their short-term borrowing programs and, otherwise, provide additional
liquidity.
Investment agreements represent numerous individual contractual borrowing arrangements under which
Berkshire is required to periodically pay interest over contract terms, which range from a few months to over 30 years.
Interest under such contracts may be at fixed or variable rates. The weighted average interest rate on amounts
outstanding as of December 31, 2003 and 2002 was 3.1% and 3.9%, respectively. Under certain conditions, principal
amounts may be redeemed without premium prior to the contractual maturity date at the option of the counterparties.