Berkshire Hathaway 2009 Annual Report Download - page 70

Management’s Discussion (Continued)
Insurance—Investment Income (Continued)
Fixed maturity investments as of December 31, 2009 were as follows. Amounts are in millions.
Amortized
cost
Unrealized
gains/losses
Fair
value
U.S. Treasury, U.S. government corporations and agencies ............................ $ 2,356 $ 45 $ 2,401
States, municipalities and political subdivisions ..................................... 3,689 274 3,963
Foreign governments .......................................................... 11,325 331 11,656
Corporate bonds and redeemable preferred stocks, investment grade ..................... 4,375 469 4,844
Corporate bonds and redeemable preferred stocks, non-investment grade ................. 6,386 825 7,211
Mortgage-backed securities ..................................................... 2,185 71 2,256
$30,316 $2,015 $32,331
All U.S. government obligations are rated AAA by the major rating agencies and approximately 85% of all state, municipal
and political subdivisions, foreign government obligations and mortgage-backed securities were rated AA or higher.
Non-investment grade securities represent securities that are rated below BBB- or Baa3.
Invested assets derive from shareholder capital and reinvested earnings as well as net liabilities under insurance contracts
or “float.” The major components of float are unpaid losses, unearned premiums and other liabilities to policyholders less
premiums and reinsurance receivables, deferred charges assumed under retroactive reinsurance contracts and deferred policy
acquisition costs. Float approximated $62 billion at December 31, 2009, $58 billion at December 31, 2008 and $59 billion at
December 31, 2007. The cost of float, as represented by the ratio of underwriting gain or loss to average float, was negative for
the last three years, as our insurance businesses generated underwriting gains in each year.
Utilities and Energy (“MidAmerican”)
Revenues and earnings of MidAmerican for each of the past three years are summarized below. Amounts are in millions.
Revenues Earnings
2009 2008 2007 2009 2008 2007
MidAmerican Energy Company .......................... $ 3,711 $ 4,742 $ 4,325 $ 285 $ 425 $ 412
PacifiCorp ........................................... 4,543 4,558 4,319 788 703 692
Natural gas pipelines ................................... 1,073 1,221 1,088 457 595 473
U.K. utilities ......................................... 829 1,001 1,114 248 339 337
Real estate brokerage .................................. 1,071 1,147 1,511 43 (45) 42
Other ............................................... 216 1,302 271 25 1,278 130
$11,443 $13,971 $12,628
Earnings before corporate interest and taxes ................ 1,846 3,295 2,086
Interest, other than to Berkshire .......................... (318) (332) (312)
Interest on Berkshire junior debt .......................... (58) (111) (108)
Income taxes and noncontrolling interests .................. (313) (1,002) (477)
Net earnings ...................................... $ 1,157 $ 1,850 $ 1,189
Earnings attributable to Berkshire * ....................... $ 1,071 $ 1,704 $ 1,114
Debt owed to others at December 31 ...................... 19,579 19,145 19,002
Debt owed to Berkshire at December 31 ................... 353 1,087 821
*Net of noncontrolling interests and includes interest earned by Berkshire (net of related income taxes).
Through our 89.5% ownership interest in MidAmerican Energy Holdings Company (“MidAmerican”), we operate an
international energy business. MidAmerican’s domestic regulated energy interests are comprised of two regulated utility
companies and two interstate natural gas pipeline companies. In the United Kingdom, MidAmerican operates two electricity
distribution businesses. The rates that our utilities and natural gas pipelines charge customers for energy and other services are
68