Berkshire Hathaway 2015 Annual Report Download - page 107

Management’s Discussion and Analysis (Continued)
Interest Rate Risk (Continued)
The following table summarizes the estimated effects of hypothetical changes in interest rates on our significant assets and
liabilities that are subject to interest rate risk. It is assumed that the interest rate changes occur immediately and uniformly to
each category of instrument containing interest rate risk, and that there are no significant changes to other factors used to
determine the value of the instrument. The hypothetical changes in interest rates do not reflect what could be deemed best or
worst case scenarios. Variations in interest rates could produce significant changes in the timing of repayments due to
prepayment options available to the issuer. For these reasons, actual results might differ from those reflected in the table.
Dollars are in millions.
Estimated Fair Value after
Hypothetical Change in Interest Rates
(bp=basis points)
Fair Value
100 bp
decrease
100 bp
increase
200 bp
increase
300 bp
increase
December 31, 2015
Assets:
Investments in fixed maturity securities .................... $26,027 $26,618 $25,351 $24,733 $24,164
Other investments (1) ................................... 11,394 11,571 10,664 10,228 9,814
Loans and finance receivables ........................... 13,112 13,594 12,661 12,240 11,844
Liabilities:
Notes payable and other borrowings:
Insurance and other ................................ 14,773 15,589 13,979 13,287 12,679
Railroad, utilities and energy ........................ 62,471 68,625 57,279 52,833 49,006
Finance and financial products ....................... 12,363 12,942 11,860 11,420 11,032
Equity index put option contracts ......................... 3,552 4,110 3,059 2,624 2,242
December 31, 2014
Assets:
Investments in fixed maturity securities .................... $27,636 $28,291 $26,843 $26,127 $25,529
Other investments (1) ................................... 11,239 11,771 10,772 10,317 9,887
Loans and finance receivables ........................... 12,891 13,369 12,444 12,026 11,633
Liabilities:
Notes payable and other borrowings:
Insurance and other ................................ 12,484 13,142 11,914 11,415 10,973
Railroad, utilities and energy ........................ 62,802 69,196 57,412 52,832 48,908
Finance and financial products ....................... 13,417 13,713 12,812 12,281 11,810
Equity index put option contracts ......................... 4,560 5,343 3,874 3,277 2,759
(1) Excludes other investments that are not subject to a significant level of interest rate risk.
Foreign Currency Risk
Certain of our subsidiaries operate in foreign jurisdictions and we transact business in foreign currencies. We generally do
not use derivative contracts to hedge foreign currency price changes primarily because of the natural hedging that occurs
between assets and liabilities denominated in foreign currencies in our Consolidated Financial Statements. In addition, we hold
investments in common stocks of major multinational companies such as The Coca-Cola Company that have significant foreign
business and foreign currency risk of their own. Our net assets subject to translation are primarily in our insurance, utilities and
energy and certain manufacturing and services subsidiaries, as well as through our investment in Kraft Heinz common stock that
is accounted for under the equity method. The translation impact is somewhat offset by transaction gains or losses on net
reinsurance liabilities of certain U.S. subsidiaries that are denominated in foreign currencies as well as the equity index put
option liabilities of U.S. subsidiaries relating to contracts that would be settled in foreign currencies.
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