Berkshire Hathaway 2008 Annual Report Download - page 41

Notes to Consolidated Financial Statements (Continued)
(3) Investments in fixed maturity securities (Continued)
Approximately 65% of these securities were rated A or higher without the benefit of an insurer guarantee (and approximately
54% of the remaining securities were not rated on an underlying basis). Berkshire held no investments in these securities as of
December 31, 2007.
The amortized cost and estimated fair values of securities with fixed maturities at December 31, 2008 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 2009 Due 2010 – 2013 Due 2014 – 2018 Due after 2018
Mortgage-backed
securities Total
Amortized cost ..................... $4,027 $13,239 $4,808 $4,441 $5,400 $31,915
Fair value ......................... 4,091 13,373 3,822 4,697 5,649 31,632
(4) Investments in equity securities
Investments in equity securities are summarized below (in millions).
2008 2007
Cost .................................................................................. $40,140 $44,695
Gross unrealized gains ................................................................... 14,782 31,289
Gross unrealized losses * ................................................................. (5,849) (985)
Fair value .............................................................................. $49,073 $74,999
* Substantially all of the gross unrealized losses pertain to security positions that have been held for less than 12 months.
(5) Other Investments
A summary of other investments as of December 31, 2008 follows (in millions).
Cost
Unrealized
Gain
Fair
Value
Carrying
Value
Other fixed maturity and equity investments ................................ $14,452 $ 36 $14,488 $14,675
Equity method investments .............................................. 5,919 352 6,271 6,860
$20,371 $388 $20,759 $21,535
During 2008, Berkshire acquired newly issued equity and debt instruments issued by Wm. Wrigley Jr. Company
(“Wrigley”), The Goldman Sachs Group, Inc. (“GS”) and The General Electric Company (“GE”). These securities are reflected
in other fixed maturity and equity investments in the preceding table. In addition, Berkshire adopted the equity method with
respect to its investments in Burlington Northern Santa Fe Corporation (“BNSF”) and Moody’s Corporation (“Moody’s”).
On October 6, 2008, Berkshire acquired $4.4 billion par amount of 11.45% subordinated notes due 2018 of Wrigley
(“Wrigley Notes”) and $2.1 billion of preferred stock of Wrigley (“Wrigley Preferred”). The Wrigley Notes and Wrigley
Preferred were acquired in connection with Mars, Incorporated’s acquisition of Wrigley. Berkshire may not transfer, sell or
assign the Wrigley Notes or Wrigley Preferred to third parties. Berkshire has classified the Wrigley Notes as “held-to-maturity”
and accordingly is carrying the Wrigley Notes at cost. Dividends are payable on the Wrigley Preferred at a rate of 5% per
annum. The Wrigley Preferred is subject to certain put and call arrangements in 2016 and annually beginning in 2021. The
redemption amount of the Wrigley Preferred is based upon the future earnings of Wrigley.
On October 1, 2008, Berkshire 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 an aggregate cost of $5
billion. The GS Preferred may be redeemed at any time by GS at a price of $110,000 per share ($5.5 billion in aggregate). The
GS Warrants expire in 2013 and can be exercised for an aggregate cost of $5 billion ($115/share).
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