Berkshire Hathaway 2014 Annual Report Download - page 107

Management’s Discussion (Continued)
Contractual Obligations
We are party to contracts associated with ongoing business and financing activities, which will result in cash payments to
counterparties in future periods. Certain obligations are reflected in our Consolidated Balance Sheets, such as notes payable,
which require future payments on contractually specified dates and in fixed and determinable amounts. Other obligations pertain
to the acquisition of goods or services in the future, such as minimum rentals under operating leases and certain purchase
obligations, and are not currently reflected in the financial statements. Such obligations will be reflected in future periods as the
goods are delivered or services provided. Amounts due as of the balance sheet date for purchases where the goods and services
have been received and a liability incurred are not included in the following table to the extent that such amounts are due within
one year of the balance sheet date.
The timing and/or amount of the payments under certain contracts are contingent upon the outcome of future events.
Actual payments will likely vary, perhaps significantly, from estimates reflected in the table that follows. Most significantly, the
timing and amount of payments arising under property and casualty insurance contracts are contingent upon the outcome of
future claim settlement activities or events. In addition, obligations arising under life, annuity and health insurance benefits are
contingent on future premiums, allowances, mortality, morbidity, expenses and policy lapse rates, as applicable. These amounts
are based on the liability estimates reflected in our Consolidated Balance Sheet as of December 31, 2014. Although certain
insurance losses and loss adjustment expenses and life, annuity and health benefits are ceded under reinsurance contracts,
receivables recorded in the Consolidated Balance Sheet are not reflected in the table.
A summary of contractual obligations as of December 31, 2014 follows. Amounts are in millions.
Estimated payments due by period
Total 2015 2016-2017 2018-2019 After 2019
Notes payable and other borrowings (1) .......................... $128,267 $10,775 $16,157 $16,772 $ 84,563
Operating leases ............................................ 8,642 1,279 2,160 1,598 3,605
Purchase obligations ......................................... 43,985 14,592 9,091 6,635 13,667
Losses and loss adjustment expenses (2) .......................... 73,222 14,883 15,942 9,282 33,115
Life, annuity and health insurance benefits (3) ..................... 25,336 1,443 235 325 23,333
Other ..................................................... 20,635 5,107 1,280 2,158 12,090
Total ..................................................... $300,087 $48,079 $44,865 $36,770 $170,373
(1) Includes interest.
(2) Before reserve discounts of $1,745 million.
(3) Amounts represent estimated undiscounted benefits, net of estimated future premiums, as applicable.
Critical Accounting Policies
Certain accounting policies require us to make estimates and judgments that affect the amounts reflected in the
Consolidated Financial Statements. Such estimates and judgments necessarily involve varying, and possibly significant, degrees
of uncertainty. Accordingly, certain amounts currently recorded in the financial statements will likely be adjusted in the future
based on new available information and changes in other facts and circumstances.
Property and casualty losses
A summary of our consolidated liabilities for unpaid property and casualty losses is presented in the table below. Amounts
are in millions.
Gross unpaid losses Net unpaid losses *
Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2013
GEICO .................................................... $12,207 $11,342 $11,402 $10,644
General Re ................................................. 14,790 15,668 14,006 14,757
BHRG ..................................................... 35,916 30,446 27,420 25,314
Berkshire Hathaway Primary Group ............................. 8,564 7,410 7,761 6,737
Total ...................................................... $71,477 $64,866 $60,589 $57,452
* Net of reinsurance recoverable and deferred charges on reinsurance assumed.
105