(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of ~~October~~July 27, ~~2016:~~2017:


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
	(Unaudited)				(Unaudited)
ASSETS
*Insurance and Other:*
Cash and cash equivalents	$	68,269	$	61,181		$ 20,142		$ 23,581
Investments:
Fixed maturity securities		24,613		25,988
Equity securities		100,757		110,212
Other		15,415		15,998
Investments in The Kraft Heinz Company (Fair Value: September 30, 2016 – $29,130; December 31, 2015 – $32,042)		15,711		23,424
Short-term investments in U.S. Treasury Bills						66,008		47,338
Investments in fixed maturity securities						23,381		23,432
Investments in equity securities						135,355		120,471
Investment in The Kraft Heinz Company (Fair Value: June 30, 2017 – $27,871; December 31, 2016 – $28,418)						15,584		15,345
Other investments						16,838		14,364
Receivables		27,544		23,303		28,953		27,097
Inventories		15,763		11,916		16,442		15,727
Property, plant and equipment		19,326		15,540		19,790		19,325
Goodwill		53,832		37,188		54,471		53,994
Other intangible assets		35,034		9,148		33,220		33,481
Deferred charges reinsurance assumed		7,505		7,687		13,597		8,047
Other		8,685		6,697		7,560		7,126

		392,454		348,282		451,341		409,328

*Railroad, Utilities and Energy:*
Cash and cash equivalents		3,893		3,437		4,962		3,939
Property, plant and equipment		123,005		120,279		125,328		123,759
Goodwill		24,186		24,178		24,306		24,111
Regulatory assets		4,369		4,285		4,644		4,457
Other		14,219		12,833		14,129		13,550

		169,672		165,012		173,369		169,816

*Finance and Financial Products:*
Cash and cash equivalents		12,673		7,112		1,314		528
Short-term investments in U.S. Treasury Bills						7,323		10,984
Investments in equity and fixed maturity securities		336		411		408		408
Other investments		2,078		5,719		3,396		2,892
Loans and finance receivables		13,213		12,772		14,559		13,300
Property, plant and equipment and assets held for lease		9,737		9,347		9,791		9,689
Goodwill		1,374		1,342		1,398		1,381
Other		2,501		2,260		2,691		2,528

		41,912		38,963		40,880		41,710

	$	604,038	$	552,257		$ 665,590		$620,854


	Third Quarter				First Nine Months					Second Quarter				First Six Months
	2016		2015		2016			2015		2017		2016		2017		2016
	(Unaudited)				(Unaudited)					(Unaudited)				(Unaudited)
Revenues:
*Insurance and Other:*
Insurance premiums earned	$	11,364	$	10,514	$	33,287		$	30,454	$	12,367	$	10,799	$	34,120	$	21,923
Sales and service revenues		30,536		27,436		89,357			80,169		31,733		30,542		61,962		58,821
Interest, dividend and other investment income		1,276		1,132		4,284			3,758		1,322		1,411		2,484		2,562
Investment gains/losses		735		8,339		3,221			8,571		287		640		599		2,486

		43,911		47,421		130,149			122,952		45,709		43,392		99,165		85,792

*Railroad, Utilities and Energy:*
Revenues		10,330		10,697		28,026			30,454		9,843		8,851		19,247		17,696

*Finance and Financial Products:*
Sales and service revenues		1,588		1,379		4,557			3,984		1,664		1,577		3,178		2,969
Interest, dividend and other investment income		366		329		1,109			1,077		364		411		714		743
Investment gains/losses		2,415		(73)		2,422			154		3		3		6		7
Derivative gains/losses		458		(764)		(332	)		380		(65)		20		395		(790)

		4,827		871		7,756			5,595		1,966		2,011		4,293		2,929

		59,068		58,989		165,931			159,001
Total revenues											57,518		54,254		122,705		106,417

Costs and expenses:
*Insurance and Other:*
Insurance losses and loss adjustment expenses		7,615		6,831		22,325			19,524		8,747		7,178		27,313		14,710
Life, annuity and health insurance benefits		1,339		1,165		3,747			4,083		1,263		1,241		2,490		2,408
Insurance underwriting expenses		2,001		1,875		5,948			5,505		2,378		1,870		4,717		3,947
Cost of sales and services		24,472		22,297		71,617			65,145		25,419		24,349		49,779		47,145
Selling, general and administrative expenses		3,959		3,721		11,747			10,177		4,020		4,066		8,136		7,788
Interest expense		259		88		674			449		700		28		970		415

		39,645		35,977		116,058			104,883		42,527		38,732		93,405		76,413

*Railroad, Utilities and Energy:*
Cost of sales and operating expenses		6,763		7,018		19,421			20,985		6,940		6,339		13,694		12,658
Interest expense		681		672		1,962			1,957		697		596		1,390		1,281

		7,444		7,690		21,383			22,942		7,637		6,935		15,084		13,939

*Finance and Financial Products:*
Cost of sales and services		886		736		2,529			2,134		962		875		1,829		1,643
Selling, general and administrative expenses		465		409		1,301			1,176		469		443		911		836
Interest expense		103		105		307			301		103		103		207		204

		1,454		1,250		4,137			3,611		1,534		1,421		2,947		2,683

Total costs and expenses											51,698		47,088		111,436		93,035
		48,543		44,917		141,578			131,436
Earnings before income taxes and equity in earnings of Kraft Heinz Company											5,820		7,166		11,269		13,382
Equity in earnings of Kraft Heinz Company											309		206		548		446

Earnings before income taxes		10,525		14,072		24,353			27,565		6,129		7,372		11,817		13,828
Income tax expense		3,192		4,545		6,281			8,698		1,774		2,290		3,323		3,089

Net earnings		7,333		9,527		18,072			18,867		4,355		5,082		8,494		10,739
Less: Earnings attributable to noncontrolling interests		135		99		284			262		93		81		172		149

Net earnings attributable to Berkshire Hathaway shareholders	$	7,198	$	9,428	$	17,788		$	18,605	$	4,262	$	5,001	$	8,322	$	10,590

Net earnings per share attributable to Berkshire Hathaway shareholders*	$	4,379	$	5,737	$	10,822		$	11,323
Average equivalent Class A Shares outstanding*		1,643,913		1,643,316		1,643,716			1,643,118
Net earnings per share attributable to Berkshire Hathaway shareholders *										$	2,592	$	3,042	$	5,060	$	6,443
Average equivalent Class A Shares outstanding *											1,644,580		1,643,745		1,644,503		1,643,616


										Second Quarter				First Six Months
	Third Quarter				First Nine Months					2017		2016		2017			2016
	2016		2015		2016			2015		(Unaudited)				(Unaudited)
	(Unaudited)				(Unaudited)
Net earnings	$	7,333	$	9,527	$	18,072		$	18,867	$	4,355	$	5,082	$	8,494		$	10,739


Other comprehensive income:
Net change in unrealized appreciation of investments		1,581		(8,623)		(1,381	)		(12,185)		4,711		(271)		13,088			(2,962	)
Applicable income taxes		(515)		2,957		478			4,237		(1,659)		94		(4,531	)		993
Reclassification of investment appreciation in net earnings		(3,088)		(1,586)		(4,904	)		(1,781)		(284)		(9)		(589	)		(1,816	)
Applicable income taxes		1,080		555		1,716			623		99		4		206			636
Foreign currency translation		(44)		(716)		(158	)		(1,499)		798		(607)		1,356			(114	)
Applicable income taxes		9		(11)		23			(30)		(23)		44		(92	)		14
Prior service cost and actuarial gains/losses of defined benefit pension plans		(21)		247		34			252		(44)		51		(54	)		55
Applicable income taxes		13		(85)		(6	)		(87)		18		(19)		25			(19	)
Other, net		3		(4)		(3	)		(104)		3		16		6			(6	)

Other comprehensive income, net		(982)		(7,266)		(4,201	)		(10,574)		3,619		(697)		9,415			(3,219	)

Comprehensive income		6,351		2,261		13,871			8,293		7,974		4,385		17,909			7,520
Comprehensive income attributable to noncontrolling interests		132		47		267			217		130		61		233			135

Comprehensive income attributable to Berkshire Hathaway shareholders	$	6,219	$	2,214	$	13,604		$	8,076	$	7,844	$	4,324	$	17,676		$	7,385


	Berkshire Hathaway shareholders’ equity										Total
	Common stock and capital in excess of par value		Accumulated other comprehensive income		Retained earnings		Treasury stock		Non- controlling interests		Total
Balance at December 31, 2014	$	35,581	$	42,732	$	163,620	$	(1,763)	$	2,857	$	243,027
Net earnings		—		—		18,605		—		262		18,867
Other comprehensive income, net		—		(10,529)		—		—		(45)		(10,574)
Issuance of common stock		63		—		—		—		—		63
Transactions with noncontrolling interests		(26)		—		—		—		(36)		(62)

Balance at September 30, 2015	$	35,618	$	32,203	$	182,225	$	(1,763)	$	3,038	$	251,321
													Berkshire Hathaway shareholders’ equity												Total
													Common stock and capital in excess of par value			Accumulated other comprehensive income		Retained earnings		Treasury stock		Non- controlling interests			Total
Balance at December 31, 2015	$	35,628	$	33,982	$	187,703	$	(1,763)	$	3,077	$	258,627	$	35,628		$	33,982	$	187,703	$	(1,763)	$	3,077		$	258,627
Net earnings		—		—		17,788		—		284		18,072		—			—		10,590		—		149			10,739
Other comprehensive income, net		—		(4,184)		—		—		(17)		(4,201)		—			(3,205)		—		—		(14	)		(3,219	)
Issuance of common stock		80		—		—		—		—		80		52			—		—		—		—			52
Transactions with noncontrolling interests		30		—		—		—		7		37		38			—		—		—		21			59

Balance at September 30, 2016	$	35,738	$	29,798	$	205,491	$	(1,763)	$	3,351	$	272,615
Balance at June 30, 2016													$	35,718		$	30,777	$	198,293	$	(1,763)	$	3,233		$	266,258


Balance at December 31, 2016													$	35,689		$	37,298	$	211,777		$(1,763)	$	3,358		$	286,359
Net earnings														—			—		8,322		—		172			8,494
Other comprehensive income, net														—			9,354		—		—		61			9,415
Issuance of common stock														40			—		—		—		—			40
Transactions with noncontrolling interests														(58	)		—		—		—		(157	)		(215	)

Balance at June 30, 2017													$	35,671		$	46,652	$	220,099	$	(1,763)	$	3,434		$	304,093


	First Nine Months						First Six Months
	2016			2015			2017			2016
	(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net earnings	$	18,072		$	18,867		$	8,494		$	10,739
Adjustments to reconcile net earnings to operating cash flows:
Investment gains/losses		(5,643	)		(8,725	)		(605	)		(2,493)
Depreciation and amortization		6,605			5,801			4,539			4,359
Other		27			620			403			(119)
Changes in operating assets and liabilities:
Losses and loss adjustment expenses		2,615			1,195			18,075			1,769
Deferred charges reinsurance assumed		182			369			(5,550	)		35
Unearned premiums		1,906			2,311			1,830			1,444
Receivables and originated loans		(3,445	)		(3,021	)		(1,608	)		(2,716)
Derivative contract assets and liabilities		137			(296	)		(395	)		790
Income taxes		3,601			5,954			1,893			1,822
Other		1,114			1,080			(449	)		(366)

Net cash flows from operating activities		25,171			24,155			26,627			15,264


Cash flows from investing activities:
Purchases of fixed maturity securities		(6,009	)		(5,365	)
Purchases of U.S. Treasury Bills and fixed maturity securities								(68,547	)		(33,029)
Purchases of equity securities		(5,185	)		(8,809	)		(13,628	)		(4,129)
Purchase of Kraft Heinz Company common stock		—			(5,258	)
Sales of fixed maturity securities		1,121			791
Redemptions and maturities of fixed maturity securities		6,640			4,421
Sales of U.S. Treasury Bills and fixed maturity securities								20,164			2,625
Redemptions and maturities of U.S. Treasury Bills and fixed maturity securities								34,164			8,828
Sales and redemptions of equity securities		19,989			5,755			7,815			12,444
Purchases of loans and finance receivables		(224	)		(144	)		(1,350	)		(188)
Collections of loans and finance receivables		271			345			393			174
Acquisitions of businesses, net of cash acquired		(30,815	)		(4,802	)		(1,721	)		(30,440)
Purchases of property, plant and equipment		(9,429	)		(11,803	)		(5,149	)		(6,144)
Other		(611	)		21			(112	)		(397)

Net cash flows from investing activities		(24,252	)		(24,848	)		(27,971	)		(50,256)


Cash flows from financing activities:
Proceeds from borrowings of insurance and other businesses		9,385			3,271			1,295			8,600
Proceeds from borrowings of railroad, utilities and energy businesses		2,234			4,468			2,413			2,211
Proceeds from borrowings of finance businesses		4,740			998			1,298			3,494
Repayments of borrowings of insurance and other businesses		(1,921	)		(1,875	)		(1,180	)		(1,148)
Repayments of borrowings of railroad, utilities and energy businesses		(1,879	)		(1,050	)		(1,768	)		(1,781)
Repayments of borrowings of finance businesses		(1,220	)		(1,254	)		(2,897	)		(195)
Changes in short term borrowings, net		888			(508	)		462			618
Acquisitions of noncontrolling interests		(3	)		(71	)
Other		(28	)		(181	)		(92	)		(46)

Net cash flows from financing activities		12,196			3,798			(469	)		11,753

Effects of foreign currency exchange rate changes		(10	)		(114	)		183			2

Increase in cash and cash equivalents		13,105			2,991			(1,630	)		(23,237)
Cash and cash equivalents at beginning of year		71,730			63,269
Cash and cash equivalents at beginning of year *								28,048			67,161

Cash and cash equivalents at end of third quarter *	$	84,835		$	66,260
Cash and cash equivalents at June 30 *							$	26,418		$	43,924

* Cash and cash equivalents are comprised of the following:
Beginning of year—
Insurance and Other	$	61,181		$	57,974		$	23,581		$	56,612
Railroad, Utilities and Energy		3,437			3,001			3,939			3,437
Finance and Financial Products		7,112			2,294			528			7,112

	$	71,730		$	63,269		$	28,048		$	67,161

End of third quarter—
June 30—
Insurance and Other	$	68,269		$	56,166		$	20,142		$	33,033
Railroad, Utilities and Energy		3,893			4,691			4,962			3,036
Finance and Financial Products		12,673			5,403			1,314			7,855

	$	84,835		$	66,260		$	26,418		$	43,924

The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc. (“Berkshire” or “Company”) consolidated with the accounts of all its subsidiaries and affiliates in which Berkshire holds controlling financial interests as of the financial statement date. In these notes the terms “us,” “we” or “our” refer to Berkshire and its consolidated subsidiaries. Reference is made to Berkshire’s most recently issued Annual Report on Form10-K (“Annual Report”) which includes information necessary or useful to understanding Berkshire’s businesses and financial statement presentations. Our significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in the Annual Report. At December 31, 2016, we began presenting U.S. Treasury Bills with maturity dates greater than three months from their purchase dates separately in our Consolidated Balance Sheets. Accordingly, we revised the comparative 2016 Consolidated Statement of Cash Flows to reflect this change.

Financial information in this Quarterly Report reflects ~~any~~all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with accounting principles generally accepted in the United States (“GAAP”). For a number of reasons, our results for interim periods are not normally indicative of results to be expected for the year. The timing and magnitude of catastrophe losses incurred by insurance subsidiaries and the estimation error inherent to the process of determining liabilities for unpaid losses of insurance subsidiaries can be more significant to results of interim periods than to results for a full year. Variations in the amount and timing of investment gains/losses can cause significant variations in periodic net earnings. ~~Investment gains/losses are recorded when investments are disposed or are other-than-temporarily impaired.~~ In addition, changes in the fair values of liabilities associated with derivative contracts and gains and losses associated with the periodic revaluation of certain assets and liabilities denominated in foreign currencies can cause significant variations in periodic net earnings.

In May 2014, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU2014-09 “Revenue from Contracts with Customers.” ASU2014-09 applies to contracts with customers, excluding, most notably, insurance and leasing contracts. ~~ASU 2014-09 prescribes a~~The framework ~~in accounting for revenues from contracts within its scope, including~~prescribed by ASU2014-09 includes (a) identifying the contract, (b) identifying the related performance obligations, ~~under the contract,~~ (c) determining the transaction price, (d) allocating the transaction price to the identified performance obligations and (e) recognizing revenues as the identified performance obligations are satisfied. Based on our evaluationsto-date, we do not currently believe the adoption of ASU2014-09 will have a material effect on our Consolidated Financial Statements. However, timing of the recognition of revenue and related costs may change with respect to certain of our contracts with customers. For instance, revenues and costs for certain contracts may be recognized over time rather than when the product or service is delivered, as is the current practice. In addition, certain contracts may be treated as leases for accounting purposes, rather than contracts with customers subject to ASU2014-09. Our evaluations of these and other issues and implementation efforts concerning ASU2014-09 are ongoing and also ~~prescribes additional financial statement presentations and disclosures.~~include consideration of the new disclosure requirements. We ~~currently expect to~~will adopt ASU2014-09 as of January 1, 2018, under the modified retrospective method where the cumulative effect is recognized at the date of initial application. Our evaluation of ASU 2014-09 is ongoing and not complete. The FASB has issued and may issue in the future, interpretative guidance, which may cause our evaluation to change. While we anticipate some changes to revenue recognition for certain customer contracts, we do not currently believe ASU 2014-09 will have a material effect on our Consolidated Financial Statements.

In May 2015, the FASB issued ASU 2015-09 “Financial Services—Insurance—Disclosures about Short-Duration Contracts,” which requires additional disclosures in annual and interim reporting periods by insurance entities regarding liabilities for unpaid claims and claim adjustment expenses, and changes in assumptions or methodologies for calculating such liabilities. ASU 2015-09 is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. We continue to evaluate the effect adopting this standard will have on the disclosures in our Consolidated Financial Statements.method.

In January 2016, the FASB issued ASU2016-01 “Financial Instruments—Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU2016-01 generally requires that equity ~~investments~~securities (excluding equity method investments) be measured at fair value with changes in fair value recognized in net income. Under existing GAAP, changes in fair value ofavailable-for-sale equity investments are recorded in other comprehensive income. Given the current magnitude of our investments in equity ~~investments,~~securities, the adoption of ASU2016-01 will ~~likely~~ have a significant impact on the periodic net earnings reported in our Consolidated Statement of Earnings, although it will ~~likely~~ not significantly ~~impact~~affect our comprehensive income or total shareholders’ equity. We will adopt ASU2016-01 ~~is effective for annual and interim periods beginning after December 15, 2017, with the cumulative effect of the adoption made to the balance sheet~~ as of ~~the~~January 1, 2018. As of that date, ~~of adoption. Thus,~~ the ~~adoption will result in a reclassification of the related~~ accumulated unrealized appreciation relating to our investments in equity securities, which is currently included in accumulated other comprehensive income, will be reclassified to retained ~~earnings, with no impact on Berkshire shareholders’ equity.~~earnings.

In February 2016, the FASB issued ASU2016-02 “Leases.” ASU2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and aright-of-use asset representing its right to use the underlying asset for the lease term, along with additional qualitative and quantitative disclosures. ASU2016-02 is effective for ~~annual and interim~~reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect this standard will have on our Consolidated Financial Statements.

In June 2016, the FASB issued ASU2016-13 “Financial Instruments—Credit Losses,” which provides for the recognition and measurement at the reporting date of all expected credit losses for financial assets held at amortized cost andavailable-for-sale debt securities. Currently, credit losses are recognized and measured when such losses become probable based on the prevailing facts and circumstances. ASU2016-13 is effective for reporting periods beginning after December 15, 2019. We are currently evaluating the effect this standard will have on our Consolidated Financial Statements.

In ~~June 2016,~~January 2017, the FASB issued ASU ~~2016-13 “Financial Instruments—Credit Losses,~~2017-04 “Simplifying the Test for Goodwill Impairment.” ~~which provides for~~ASU2017-04 eliminates the ~~recognition and~~requirement to determine the implied value of goodwill in measuring an impairment loss. Upon adoption, the measurement atof a goodwill impairment will represent the excess of the reporting ~~date~~unit’s carrying value over fair value, limited to the carrying value of all expected credit losses for financial assets held at amortized cost and available-for-sale debt securities. Currently credit losses are recognized and measured when such losses become probable based on the prevailing facts and circumstances.goodwill. ASU ~~2016-13~~2017-04 is effective for ~~reporting periods~~goodwill impairment tests in fiscal years beginning after December 15, ~~2019. We are currently evaluating the effect this standard will have on our Consolidated Financial Statements.~~2019, with early adoption permitted.

Our long-held acquisition strategy is to acquire businesses at sensible prices that have consistent earning power, good returns on equity and able and honest management. Financial results attributable to business acquisitions are included in our Consolidated Financial Statements beginning on their respective acquisition dates.

On ~~August 8, 2015,~~January 29, 2016, Berkshire ~~entered into a definitive agreement with~~acquired all outstanding common stock of Precision Castparts Corp. (“PCC”) ~~to acquire all outstanding PCC shares of common stock~~ for $235 per share in ~~cash. The acquisition was completed on January 29, 2016.~~cash pursuant to a merger agreement dated August 8, 2015. The aggregate consideration paid was approximately $32.7 billion, which included the value of PCC shares we already owned. We funded the acquisition with a combination of existing cash balances and proceeds from a short-term credit facility.

PCC is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power and general industrial markets. PCC is a market leader in manufacturing complex structural investment castings and forged components for aerospace markets, machined airframe components and highly engineered critical fasteners for aerospace applications, and in manufacturing airfoil castings for the aerospace and industrial gas turbine markets. PCC also is a leading producer of titanium and nickel superalloy melted and mill products for the aerospace, chemical processing, oil and gas and pollution control industries, and manufactures extruded seamless pipe, fittings and forgings for power generation and oil and gas applications.

~~In November 2014, Berkshire entered into a definitive agreement with~~On February 29, 2016, we acquired the Duracell business from The Procter & Gamble Company (“P&G”) pursuant to ~~acquire the Duracell business from P&G. The transaction closed on February 29, 2016. Duracell is a leading manufacturer of high-performance alkaline batteries and is~~ an ~~innovator~~agreement entered into in ~~renewable power and wireless charging technologies.~~November 2014. Pursuant to the agreement, we received a recapitalized Duracell Company in exchange for shares of P&G common stock held by Berkshire subsidiaries, which had a fair value of approximately $4.2 billion. Duracell is a leading manufacturer of high-performance alkaline batteries and is an innovator in wireless charging technologies.

~~Financial results attributable to these business acquisitions are included~~Pro forma consolidated revenues and net earnings data for 2016 was not materially different from the amounts reflected in ~~our~~the accompanying Consolidated Financial Statements beginning on their respective acquisition dates. The acquisition date fair values of certain assets and liabilities, particularly property, plant and equipment and intangible assets, and related estimated useful lives are provisional and are subject to revision as the related valuations are completed. We expect such values will be finalized as of December 31, 2016.Statements. Goodwill from these acquisitions is not amortizable for income tax purposes. ~~Preliminary~~The fair values of identified assets acquired and liabilities assumed and residual goodwill of PCC and Duracell at their respective acquisition dates are summarized ~~in the table that~~as follows (in millions).


	PCC		Duracell		PCC		Duracell
Cash and cash equivalents	$	250	$	1,807	$	250	$	1,807
Inventories		3,430		326		3,430		319
Property, plant and equipment		2,772		364		2,765		359
Goodwill		15,880		614		16,011		866
Other intangible assets		24,197		2,024		23,527		1,550
Other assets		1,914		256		1,916		242

Assets acquired	$	48,443	$	5,391	$	47,899	$	5,143


Accounts payable, accruals and other liabilities	$	2,442	$	392	$	2,442	$	410
Notes payable and other borrowings		5,251		—		5,251		—
Income taxes, principally deferred		8,092		760		7,548		494

Liabilities assumed	$	15,785	$	1,152	$	15,241	$	904

Net assets	$	32,658	$	4,239	$	32,658	$	4,239

The following table sets forth certain unaudited pro forma consolidated earnings data for the first nine months of 2015 as if the acquisitions discussed previously were consummated on the same terms at the beginning of the year preceding their respective acquisition dates (in millions, except per share amount). Pro forma data for the first nine months of 2016 was not materially different from the amounts reflected in the accompanying Consolidated Financial Statements.

Investments in securities with fixed maturities as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 are summarized by type below (in millions).


	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2016
June 30, 2017
U.S. Treasury, U.S. government corporations and agencies	$	4,549	$	17	$	(1	)	$	4,565	$	4,800	$	6	$	(14	)	$	4,792
States, municipalities and political subdivisions		1,216		64		(1	)		1,279		1,050		54		(1	)		1,103
Foreign governments		9,454		362		(21	)		9,795		8,726		223		(27	)		8,922
Corporate bonds		6,996		800		(7	)		7,789		6,897		668		(6	)		7,559
Mortgage-backed securities		1,068		156		(5	)		1,219		924		115		(4	)		1,035

	$	23,283	$	1,399	$	(35	)	$	24,647	$	22,397	$	1,066	$	(52	)	$	23,411

December 31, 2015
December 31, 2016
U.S. Treasury, U.S. government corporations and agencies	$	3,425	$	10	$	(8	)	$	3,427	$	4,519	$	16	$	(8	)	$	4,527
States, municipalities and political subdivisions		1,695		71		(2	)		1,764		1,159		58		(1	)		1,216
Foreign governments		11,327		226		(85	)		11,468		8,860		207		(66	)		9,001
Corporate bonds		7,323		632		(29	)		7,926		6,899		714		(9	)		7,604
Mortgage-backed securities		1,279		168		(5	)		1,442		997		126		(6	)		1,117

	$	25,049	$	1,107	$	(129	)	$	26,027	$	22,434	$	1,121	$	(90	)	$	23,465

Investments in fixed maturity securities are reflected in our Consolidated Balance Sheets as follows (in millions).


	September 30, 2016			December 31, 2015			June 30, 2017		December 31, 2016
Insurance and other		$	24,613		$	25,988	$	23,381	$	23,432
Finance and financial products			34			39		30		33

		$	24,647		$	26,027	$	23,411	$	23,465

Investments in foreign government securities include securities issued by national and provincial government entities as well as instruments that are unconditionally guaranteed by such entities. As of ~~September~~June 30, ~~2016,~~2017, approximately ~~92%~~93% of foreign government holdings were rated AA or higher by at least one of the major rating agencies. Approximately ~~80%~~81% of foreign government holdings were issued or guaranteed by the United Kingdom, Germany, Australia or Canada.

The amortized cost and estimated fair value of securities with fixed maturities at ~~September~~June 30, ~~2016~~2017 are summarized below by contractual maturity dates. Actual maturities may differ from contractual maturities due to early call or prepayment rights held by ~~issuers (in millions).~~issuers. Amounts are in millions.


	Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Mortgage- backed securities		Total		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Mortgage- backed securities		Total
Amortized cost		$8,007		$10,773		$1,076		$2,359		$1,068		$23,283		$8,690		$10,009		$ 607		$2,167		$ 924		$22,397
Fair value		8,068		11,224		1,177		2,959		1,219		24,647		8,762		10,280		660		2,674		1,035		23,411

Investments in equity securities as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 are summarized based on the primary industry of the investee in the table below (in millions).


	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value		Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2016 *
June 30, 2017 *
Banks, insurance and finance	$	19,852	$	21,695	$	(173	)	$	41,374	$	20,887	$	32,754	$	—		$	53,641
Consumer products		5,149		16,790		—			21,939		19,495		22,267		—			41,762
Commercial, industrial and other		32,517		7,904		(1,199	)		39,222		31,540		10,946		(776	)		41,710

	$	57,518	$	46,389	$	(1,372	)	$	102,535	$	71,922	$	65,967	$	(776	)	$	137,113


	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value		Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
December 31, 2015 *
December 31, 2016*
Banks, insurance and finance	$	20,026	$	27,965	$	(21)	$	47,970	$	19,852	$	30,572	$	—		$	50,424
Consumer products		6,867		18,022		(1)		24,888		10,657		16,760		(9	)		27,408
Commercial, industrial and other		35,417		6,785		(3,238)		38,964		35,868		9,033		(701	)		44,200

	$	62,310	$	52,772	$	(3,260)	$	111,822	$	66,377	$	56,365	$	(710	)	$	122,032

As of ~~September~~June 30, ~~2016~~2017 and December 31, 2015, we concluded that the unrealized losses shown in the tables above were temporary. Our conclusions were based on: (a) our ability and intent to hold the securities to recovery; (b) our assessment that the underlying business and financial condition of the issuers was favorable; (c) our opinion that the relative price declines were not significant; and (d) our belief that market prices will increase to and exceed our cost. As of September 30, 2016, ~~and December 31, 2015,~~ unrealized losses on equity securities in a continuous unrealized loss position for more than twelve consecutive months were ~~$995~~$110 million and ~~$989~~$551 million, respectively.

Unrealized losses at September 30, 2016 included $941 million related to our investment in IBM common stock of which $855 million had been in a continuous unrealized loss position for more than twelve months. Unrealized losses represented 7% of our cost. IBM continues to be profitable and generate significant cash flows. We currently do not intend to dispose of our IBM common stock and we expect that the fair value of this investment will recover and ultimately exceed our cost.

Investments in equity securities are reflected in our Consolidated Balance Sheets as follows (in millions).


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
Insurance and other	$	100,757	$	110,212	$	135,355	$	120,471
Railroad, utilities and energy *		1,476		1,238		1,380		1,186
Finance and financial products		302		372		378		375

	$	102,535	$	111,822	$	137,113	$	122,032

~~Other investments include~~In June 2013, Berkshire invested $12.25 billion in a newly-formed company, H.J. Heinz Holding Corporation (“Heinz Holding”), consisting of 425 million shares of common stock, warrants to acquire approximately 46 million additional shares of common stock at $0.01 per share and cumulative compounding preferred stock ~~of Wm. Wrigley Jr. Company~~ (“Wrigley”), The Dow Chemical Company (“Dow”) and Bank of America Corporation (“BAC”) warrants to purchase common stock of BAC and preferred and common stock of Restaurant Brands International, Inc. (“RBI”). Other investments are classified as available-for-sale and are shown in our Consolidated Balance Sheets as follows (in millions).

During 2008, we purchased $2.1 billion of Wrigley preferred stock that was acquired pursuant to a shareholder agreement in conjunction with Mars Incorporated’s acquisition of Wrigley. Pursuant to certain put and call provisions in the shareholder agreement, up to 50% of our original investment was redeemable over a 90-day period that was scheduled to begin on October 6, 2016. On August 8, 2016, we entered into a stock purchase agreement with Mars, under which Mars agreed to acquire all of the Wrigley preferred stock for approximately $4.56 billion, which included a prorated dividend that would have otherwise been payable on October 6, 2016. The transaction was completed on September 27, 2016.

~~We own 3,000,000 shares of Series A Cumulative Convertible Perpetual~~ Preferred ~~Stock of Dow (“Dow Preferred”~~Stock”) with a liquidation ~~value~~preference of ~~$1,000 per share. Each~~$8 billion. An affiliate of the global investment firm 3G Capital (such affiliate, “3G”) also acquired 425 million shares of Heinz Holding common stock for $4.25 billion. At that time, Berkshire and 3G each owned a 50% share of ~~the Dow Preferred is convertible into 24.201 shares of Dow~~Heinz Holding common ~~stock (equivalent to a conversion price of $41.32 per share). Dow currently has the option to cause some or all of the Dow Preferred to be converted into Dow common stock at the~~stock. Heinz Holding then applicable conversion rate, if the New York Stock Exchange closing price of its common stock exceeds $53.72 per share for any 20 trading days within a period of 30 consecutive trading days ending the day before Dow exercises its option. The Dow Preferred is entitled to dividends at a rate of 8.5% per annum.

We own 50,000 shares of 6% Non-Cumulative Perpetual Preferred Stock of BAC (“BAC Preferred”) with a liquidation value of $100,000 per share and warrants to purchase 700,000,000 shares of common stock of BAC (“BAC Warrants”). The BAC Preferred is redeemable at the option of BAC beginning on May 7, 2019 at a redemption price of $105,000 per share (or $5.25 billion in aggregate). The BAC Warrants expire in 2021 and are exercisable for an additional aggregate cost of $5 billion ($7.142857/share).

We own Class A 9% Cumulative Compounding Perpetual Preferred Shares of RBI (“RBI Preferred”) having a stated value of $3 billion. RBI, domiciled in Canada, is the ultimate parent company of Burger King and Tim Hortons. The RBI Preferred is entitled to dividends on a cumulative basis of 9% per annum plus an additional amount, if necessary, to produce an after-tax yield to Berkshire as if the dividends were paid by a U.S.-based company. The RBI Preferred is redeemable at the option of RBI beginning on December 12, 2017. If not redeemed prior to December 12, 2024, we can cause RBI to redeem the RBI Preferred. In either case, the redemption price will be 109.9% of the stated value of such shares.acquired H.J. Heinz Company.

In March 2015, Heinz Holding entered into an agreement to acquire all of the outstanding common stock of Kraft Foods Group, Inc. (“Kraft”). In June 2015, Berkshire exercised the aforementioned common stock warrants. On July 1, 2015, Berkshire and 3G also acquired new shares of Heinz Holding common stock for $5.26 billion and $4.74 billion, respectively. After these transactions, Berkshire owned approximately 52.5% of the outstanding shares of Heinz Holding. On July 2, 2015, Heinz Holding completed its acquisition of Kraft, at which time Heinz Holding was renamed The Kraft Heinz Company (“Kraft Heinz”). In connection with its acquisition of Kraft, Kraft Heinz issued one new share of Kraft Heinz common stock for each share of Kraft common stock, which reduced Berkshire’s and 3G’s ownership interests in Kraft Heinz to 26.8% and 24.2%, respectively.

Berkshire currently owns 26.7% of the outstanding shares of Kraft Heinz common stock. We account for our investment in Kraft Heinz common stock pursuant to the equity method. The carrying value of this investment was approximately $15.6 billion at June 30, 2017 and $15.3 billion at December 31, 2016. Our earnings determined under the equity method for the first six months were $548 million in 2017 and $446 million in 2016. We received dividends on the common stock of $391 million in the first six months of 2017 and $374 million in the first six months of 2016, which we recorded as reductions of our investment. In the second quarter of 2016, we also received dividends of $180 million on our Preferred Stock investment, which Kraft Heinz redeemed for cash of $8.32 billion on June 7, 2016.

Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products. Summarized consolidated financial information of Kraft Heinz follows (in millions).

Other investments include preferred stock of Bank of America Corporation (“BAC”), warrants to purchase common stock of BAC and preferred stock of Restaurant Brands International, Inc. (“RBI”). Other investments are classified asavailable-for-sale and carried at fair value and are shown in ~~The Kraft Heinz Company~~our Consolidated Balance Sheets as follows (in millions).

On June 7, 2013, Berkshire and an affiliate of the global investment firm 3G Capital (such affiliate, “3G”), each made equity investments in H.J. Heinz Holding Corporation (“Heinz Holding”), which, together with debt financing obtained by Heinz Holding, was used to acquire H. J. Heinz Company (“Heinz”). Berkshire’s initial investments consisted of 425 million

We currently own 50,000 shares of ~~Heinz Holding common stock,~~6%Non-Cumulative Perpetual Preferred Stock of BAC (“BAC Preferred”) with a liquidation value of $100,000 per share and warrants ~~which were exercised in June 2015,~~ to ~~acquire approximately 46 million additional~~purchase 700,000,000 shares of common stock of BAC (“BAC Warrants”). The BAC Preferred is redeemable at ~~one cent~~the option of BAC beginning on May 7, 2019 at a redemption price of $105,000 per share (or $5.25 billion in aggregate). The BAC Warrants expire in 2021 and ~~cumulative compounding preferred stock (“Preferred Stock”) with a liquidation preference of $8 billion. The~~are exercisable for an aggregate cost of ~~our investments was $12.25 billion. 3G also acquired 425 million shares~~$5 billion ($7.142857/share). On June 28, 2017, BAC’s Board of ~~Heinz Holding~~Directors announced plans to increase the quarterly dividend on BAC’s common stock ~~for $4.25 billion. On June 7, 2016, our Preferred Stock investment was redeemed for cash of $8.32 billion. Prior~~ to ~~its redemption, the Preferred Stock was entitled to dividends at 9%~~$0.12 per ~~annum.~~

On July 1, 2015, Berkshire acquired 262.9 million shares of newly issued common stock of Heinz Holding for $5.26 billion and 3G acquired 237.1 million shares of newly issued common stock for $4.74 billion. Immediately thereafter, Heinz Holding executed a reverse stock split at a rate of 0.443332 of a share, ~~for each share.~~

On July 2, 2015, Heinz Holding acquired Kraft Foods Group, Inc. (“Kraft”). Upon completion of the acquisition, Heinz Holding was renamed The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products, in the world. Kraft Heinz’s leading iconic brands include~~Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.~~

In connection with Heinz Holding’s acquisition of Kraft, Kraft shareholders received one share of newly issued Heinz Holding common stock for each share of Kraft common stock and a special cash dividend of $16.50 per share. Following the issuance of these additional shares, Berkshire and 3G together owned approximately 51% of the outstanding Kraft Heinz common stock, with Berkshire owning approximately 26.8% and 3G owning 24.2%. We account for our investment in Kraft Heinz common stock on the equity method. Under the equity method, the issuance of shares by an investee is accounted for by the investor as if the investor had sold a proportionate share of its investment. As a result, we recorded a non-cash pre-tax holding gain of approximately $6.8 billionbeginning in the third quarter of ~~2015, representing the excess~~2017. On June 30, 2017, we announced our intention to exercise all of the ~~fair~~BAC Warrants we currently own when the BAC quarterly dividend increase occurs. We currently expect to use substantially all of our BAC Preferred as consideration for the $5 billion cost to exercise the BAC Warrants.

We currently own Class A 9% Cumulative Compounding Perpetual Preferred Shares of RBI (“RBI Preferred”) having a stated value of ~~Kraft Heinz common stock~~$3 billion. RBI, domiciled in Canada, franchises and operates quick service restaurants. The RBI Preferred is entitled to dividends on a cumulative basis of 9% per annum plus an additional amount, if necessary, to produce anafter-tax yield to Berkshire as if the dividends were paid by a U.S.-based company. The RBI Preferred is redeemable at the ~~date~~option of RBI beginning on December 12, 2017. In the second quarter of 2017, RBI announced its intention to redeem all or a portion of our RBI Preferred investment. If not redeemed prior to December 12, 2024, we can cause RBI to redeem the RBI Preferred. In either case, the redemption price will be 109.9% of the ~~merger over our carrying~~stated value ~~associated with the reduction in our ownership.~~

~~A summary~~ of ~~our investments in Kraft Heinz follows (in millions).~~such shares.

Our equity method earnings on the common stock and dividends earned on the Preferred Stock in the first nine months of 2016 and 2015 were $851 million and $329 million, respectively, and are included in interest, dividend and other investment income in our Consolidated Statements of Earnings. Preferred Stock dividends received in the first nine months of 2016 were $180 million. In 2015, Preferred Stock dividends received were $180 million in the third quarter and $540 million in the first nine months.

~~Summarized consolidated financial information of Kraft Heinz follows (in millions).~~

Our consolidated effective income tax rates for the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 were ~~30.3%~~28.9% and ~~25.8%~~28.1%, ~~respectively. In 2015, our effective income tax rates were 32.3% for~~respectively, and 31.1% and 22.3%, respectively, in the ~~third~~second quarter and ~~31.6% for the~~ first ~~nine months.~~six months of 2016. Our effective income tax rate normally reflects recurring benefits ~~from the recurring impact of~~from: (a) dividends received deductions applicable to certain investments in equity securities, (b) income production tax credits ~~from~~related to wind-powered electricity generation placed in service in the U.S. and (c) lower income tax rates applicable to earnings of certain foreign subsidiaries.

~~As discussed in Notes 3 and 9 to these Consolidated Financial Statements, on~~On February 29, 2016, we exchanged our long-held investment in P&G common stock for the common stock of Duracell. This exchange produced apre-tax gain of $1.1 billion for financial reporting purposes. The exchange transaction was structured as atax-free reorganization under the Internal Revenue Code. As a result, no income taxes ~~are currently~~were payable on the excess of the fair value of the business received over the tax basis of the P&G shares exchanged, and we recorded aone-time reduction of certain deferred income tax liabilities (approximately $750 million) that were recorded in 2005 in connection with our exchange of The Gillette Company common stock for P&G common stock upon the merger of those two companies. The P&G/Duracell exchange produced ~~a 4.7~~an 8.3 percentage point reduction in our consolidated effective income tax rate for the first ~~nine~~six months of 2016.

Investment gains/losses included in earnings are summarized below (in millions).

We record investments in equity and fixed maturity securities classified asavailable-for-sale at fair value and record the difference between fair value and cost in other comprehensive income. We recognize investment gains and losses when we sell or otherwise dispose such securities. Gains from sales and redemptions of equity securities in ~~2016 included gains~~the second quarter of ~~approximately $2.4 billion from the disposition of our investment in Wrigley preferred stock in the third quarter, and in the first nine months also~~2016 included $610 million from the redemption of our investment in Kraft Heinz Preferred ~~Stock and a non-cash holding gain~~Stock. Gains in the first six months of 2016 also included approximately $1.1 billion from the exchange of our P&G common stock in connection with the acquisition of Duracell. The non-cash gain from the P&G/Duracell exchange represented the excess of the fair value of net assets of Duracell over the cost basis of the P&G stock exchanged. Gains from sales and redemptions of equity securities in the third quarter and first nine months of 2015 included a non-cash holding gain of approximately $6.8 billion in connection with our investment in Kraft Heinz common stock.

We record investments in equity and fixed maturity securities classified as available-for-sale at fair value and record the difference between fair value and cost in other comprehensive income. Other-than-temporary impairment losses recognized in earnings represent reductions in the cost basis of the investment, but not the fair value. Accordingly, such losses that are included in earnings are generally offset by a credit to other comprehensive income, producing no net effect on shareholders’ equity as of the balance sheet date.

~~Inventories at September 30, 2016 included approximately $3.6 billion related to PCC and Duracell.~~

Receivables of insurance and other businesses are comprised of the following (in millions).

~~Trade and other receivables at September 30, 2016 included approximately $1.9 billion related to PCC and Duracell.~~Note 11. Receivables(Continued)

A summary of loans and finance receivables of finance and financial products businesses ~~are summarized as~~ follows (in millions).


	September 30, 2016		December 31, 2015		June 30, 2017			December 31, 2016
Loans and finance receivables before allowances and discounts	$	13,663	$	13,186	$	14,967		$	13,728
Allowances for uncollectible loans		(183)		(182)		(177	)		(182	)
Unamortized acquisition discounts		(267)		(232)		(231	)		(246	)

	$	13,213	$	12,772	$	14,559		$	13,300

Loans and finance receivables are ~~predominantly~~primarily installment loans originated or acquired by our manufactured housing ~~installment loans.~~business. In June 2017, we agreed to provide a Canada-based financial institution with a C$2 billion (approximately $1.5 billion) one-year secured revolving credit facility. The agreement expires on June 29, 2018. The outstanding loan balance of C$1.4 billion at June 30, 2017 was repaid during July. Provisions for loan losses in both the first ~~nine~~six months of 2017 and 2016 ~~and 2015~~ were ~~$124 million and $119 million, respectively.~~$78 million. Loan charge-offs, net of recoveries, in the first ~~nine~~six months ~~of 2016~~were $83 million in 2017 and ~~2015 were $123~~$78 million ~~and $136 million, respectively.~~in 2016. At ~~September~~June 30, ~~2016,~~2017, we evaluated approximately 98% of the manufactured housing loan balances ~~were evaluated~~ collectively for impairment. As a part of the evaluation process, credit quality indicators are reviewed and loans are designated as performing ornon-performing. At ~~September~~June 30, ~~2016,~~2017, we considered approximately ~~98%~~99% of the loan balances ~~were determined~~ to be performing and approximately ~~94%~~95% of the loan balances ~~were~~ current as to payment status.

A summary of property, plant and equipment of our insurance and other businesses follows (in millions).

~~Property, plant and equipment at September 30, 2016 included approximately $3.3 billion related to PCC and Duracell.~~

A summary of property, plant and equipment of our railroad and our utilities and energy businesses follows (in millions).

Note 12. Property, plant and equipment and assets held for lease(Continued)

The utility generation, transmission and distribution systems and interstate natural gas pipeline assets are owned by regulated public utility and natural gas pipeline subsidiaries.

Assets held for lease and property, plant and equipment of our finance and financial products businesses are summarized below (in millions).


	Range of estimated useful life		September 30, 2016		December 31, 2015		Ranges of estimated useful life		June 30, 2017			December 31, 2016
Assets held for lease		5 – 35 years	$	11,906	$	11,317		5 – 35 years	$	12,110		$	11,902
Land		—		223		220		—		226			224
Buildings, machinery and other		3 – 50 years		1,289		1,207		3 – 50 years		1,365			1,302

				13,418		12,744				13,701			13,428
Accumulated depreciation				(3,681)		(3,397)				(3,910	)		(3,739	)

			$	9,737	$	9,347			$	9,791		$	9,689

A reconciliation of the change in the carrying value of goodwill is as follows (in millions).


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
Balance at beginning of year	$	62,708	$	60,714	$	79,486	$	62,708
Acquisitions of businesses		17,016		2,563		616		17,650
Other, including foreign currency translation		(332)		(569)		73		(872	)

Balance at end of period	$	79,392	$	62,708	$	80,175	$	79,486


	September 30, 2016						December 31, 2015						June 30, 2017				December 31, 2016
	Gross carrying amount			Accumulated amortization			Gross carrying amount			Accumulated amortization			Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Insurance and other		$	41,575		$	6,541		$	14,610		$	5,462		$40,419		$7,199		$39,976		$6,495
Railroad, utilities and energy			897			279			888			239		903		312		898		293

		$	42,472		$	6,820		$	15,498		$	5,701		$41,322		$7,511		$40,874		$6,788

Trademarks and trade names		$	6,049		$	821		$	3,041		$	765		$ 5,275		$ 653		$ 5,175		$ 616
Patents and technology			4,455			2,329			4,252			2,050		4,435		2,512		4,341		2,328
Customer relationships			28,851			2,721			5,474			2,131		28,457		3,299		28,243		2,879
Other			3,117			949			2,731			755		3,155		1,047		3,115		965

		$	42,472		$	6,820		$	15,498		$	5,701		$41,322		$7,511		$40,874		$6,788

Other intangible assets at September 30, 2016 included preliminary fair values of intangible assets of PCC and Duracell of approximately $26.2 billion, which included approximately $17.6 billion in customer relationships and trade names that were preliminarily determined to have indefinite lives. Amortization expense in the first ~~nine~~six months ~~of 2016~~was $740 million in 2017 and ~~2015 was $1,085~~$716 million ~~and $837 million, respectively.~~in 2016. Intangible assets with indefinite lives ~~excluding intangible assets related to business acquisitions completed in 2016,~~ were approximately ~~$3.0~~$18.8 billion as of ~~September~~June 30, ~~2016~~2017 and $18.7 billion as of December 31, ~~2015.~~2016.

~~Derivative~~ We are party to derivative contracts ~~have been entered into~~ primarily through our finance and financial products and our utilities and energy businesses. ~~During 2016,~~Currently, the derivative contracts of our finance and financial products businesses ~~consisted of~~include equity index put option contracts written between 2004 and ~~a credit default contract. A summary of the~~2008. The liabilities and related notional values of ~~these~~such contracts follows (in millions).

~~The~~We record derivative ~~contracts of our finance and financial products businesses are recorded~~contract liabilities at fair value and include the changes in the fair values of such contracts ~~are reported~~ in earnings as derivative gains/losses. We entered into these contracts with the expectation that the premiums received would exceed the amounts ultimately paid to counterparties. A summary of the derivative ~~gains (losses)~~gains/losses included in our Consolidated Statements of Earnings follows (in millions).


	Third Quarter				First Nine Months					Second Quarter				First Six Months
	2016		2015		2016			2015		2017		2016		2017		2016
Equity index put options	$	458	$	(802)	$	(421	)	$	371	$	(65)	$	(83)	$	395	$	(879)
Credit default		—		38		89			9		—		103		—		89

	$	458	$	(764)	$	(332	)	$	380	$	(65)	$	20	$	395	$	(790)

The equity index put option contracts are European style options written ~~between 2004 and 2008~~ on four major equity ~~indexes. These contracts will~~indexes and expire between June 2018 and January 2026. Future payments, if any, under any given contract will be required if the prevailing index value is below the contract strike price at the expiration date. We received ~~the~~aggregate premiums of $4.2 billion on these contracts at the contract inception dates and therefore we have no counterparty credit risk.

The aggregate intrinsic value (the undiscounted liability assuming the contracts are settled based on the index values and foreign currency exchange rates as of the balance sheet date) ~~of our equity index put option contracts~~ was ~~approximately $1.6 billion~~$842 million at ~~September~~June 30, ~~2016~~2017 and ~~$1.1~~$1.0 billion at December 31, ~~2015.~~2016. However, these contracts may not be unilaterally terminated or fully settled before the expiration dates. Therefore, the ultimate amount of cash basis gains or losses on these contracts will not be determined for several years. The remaining weighted average life of all contracts was approximately ~~4.2~~3.4 years at ~~September~~June 30, ~~2016.~~2017.

A limited number of our equity index put option contracts contain collateral posting requirements with respect to changes in the fair value or intrinsic value of the contracts and/or a downgrade of Berkshire’s credit ratings. As of ~~September~~June 30, ~~2016,~~2017, we did not have any collateral posting requirements. If Berkshire’s credit ratings (currently AA from Standard & Poor’s and Aa2 from Moody’s) are downgraded below eitherA- by Standard & Poor’s or A3 by Moody’s, collateral of up to $1.1 billion could be required to be posted.

In July 2016, our last remaining credit default contract was terminated by mutual agreement with the counterparty. We paid $195 million upon termination of the contract.

Our regulated utility subsidiaries are exposed to variations in the prices of fuel required to generate electricity, wholesale electricity purchased and sold and natural gas supplied for customers. Derivative instruments, including forward purchases and sales, futures, swaps and options, are used to manage a portion of these price risks. Derivative contract assets are included in other assets and were ~~$105~~$123 million as of ~~September~~June 30, ~~2016~~2017 and ~~$103~~$142 million as of December 31, ~~2015.~~2016. Derivative contract liabilities are included in accounts payable, accruals and other liabilities and were ~~$198~~$139 million as of ~~September~~June 30, ~~2016~~2017 and ~~$237~~$145 million as of December 31, ~~2015.~~2016. Net derivative contract assets or liabilities of our regulated utilities that are probable of recovery through rates, ~~of our regulated utilities~~ are offset by regulatory liabilities or assets. Unrealized gains or losses on contracts accounted for as cash flow or fair value hedges are recorded in other comprehensive income or in net earnings, as appropriate.

~~A summary of supplemental~~Supplemental cash flow information ~~is presented in the following table~~follows (in millions).


	First Nine Months				First Six Months
	2016		2015		2017			2016
Cash paid during the period for:
Income taxes	$	2,237	$	2,575	$	1,082	$		1,055
Interest:
Insurance and other businesses		499		312		390			253
Railroad, utilities and energy businesses		2,130		2,043		1,410			1,406
Finance and financial products businesses		263		274		211			184
Non-cash investing and financing activities:
Liabilities assumed in connection with business acquisitions		17,319		2,792		167			16,997
Equity securities exchanged in connection with business acquisition		4,239		—		—			4,239

The liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under our short duration property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates forincurred-but-not-reported (“IBNR”) claims. Reconciliations of the changes in claim liabilities for the six months ending June 30, 2017 and 2016 follows (in millions).

Incurred losses and loss adjustment expenses in the preceding table reflect the losses and loss adjustment expenses recorded in earnings in each period related to insured events occurring in the current year and in prior years. We present incurred and paid losses under retroactive reinsurance contracts and discount accretion separately. Such amounts relate to prior accident years.

Incurred losses and loss adjustment expenses in the first six months of 2017 and 2016 reflected decreases of $199 million and $1,071 million, respectively, in the estimated ultimate liabilities for prior accident years’ events. In the first six months of 2017, the decrease included a $532 million decrease related to primary insurance operations (primarily private passenger automobile, healthcare malpractice and workers’ compensation coverages), which was partly offset by an increase attributable to reinsurance operations. The increase related to our reinsurance operations included $215 million with respect to certain personal injury claims in the United Kingdom due to a regulatory decision that increases calculated lump sum settlement amounts. In addition, during 2017, we increased ultimate liability estimates under certain reinsurance contracts due to higher than expected reported losses from hurricane and earthquake events that occurred in 2016. In the first six months of 2016, we reduced estimated ultimate liabilities for prior accident years’ events for reinsurance operations ($619 million) and primary insurance ($452 million). The reductions related to reinsurance operations were primarily attributable to lower than expected reported losses, while the reductions for primary insurance primarily related to private passenger automobile, healthcare malpractice and workers’ compensation coverages.

In January 2017, a Berkshire subsidiary, National Indemnity Company (“NICO”), entered into a retroactive reinsurance agreement with various subsidiaries of American International Group, Inc. (collectively, “AIG”). NICO received cash consideration of $10.2 billion and agreed to indemnify AIG for 80% of up to $25 billion, excess of $25 billion retained by AIG, of losses and allocated loss adjustment expenses with respect to certain commercial insurance loss events occurring in years prior to 2016. The transaction became effective on February 2, 2017. Berkshire agreed to guarantee the timely payment of all amounts due to AIG under the agreement.

We accounted for the AIG agreement as retroactive reinsurance of short-duration insurance contracts. As of the effective date, we recorded premiums earned and losses and loss adjustment expenses incurred of $10.2 billion. We also recorded a liability for unpaid losses and loss adjustment expenses of $16.4 billion, representing the estimated ultimate liabilities assumed, and a deferred charge reinsurance assumed asset of $6.2 billion, representing the excess of the liability over the premiums earned. This deferred charge asset will be amortized over the estimated claims settlement period using the interest method based on the estimated timing and amount of future loss payments. Amortization charges are included in losses and loss adjustment expenses in the Consolidated Statements of Earnings.

Notes payable and other borrowings are summarized below (in millions). The weighted average interest rates and maturity date ranges shown in the following tables are based on borrowings as of ~~September~~June 30, ~~2016.~~2017.


	Weighted Average Interest Rate		September 30, 2016		December 31, 2015		Weighted Average Interest Rate		June 30, 2017		December 31, 2016
Insurance and other:
Berkshire Hathaway Inc. (“Berkshire”) due 2016-2047		2.2%	$	18,108	$	9,799
Issued by Berkshire:
U.S. Dollar denominated borrowings due 2017-2047								2.8%		$10,615		$11,709
Euro denominated borrowings due 2020-2035								1.1%		7,766		5,994
Short-term subsidiary borrowings		2.2%		2,019		1,989		3.0%		2,013		2,094
Other subsidiary borrowings due 2016-2044		4.0%		7,387		2,811
Other subsidiary borrowings due 2017-2045								3.9%		7,387		7,378

			$	27,514	$	14,599				$27,781		$27,175

OnIn January ~~8, 2016, Berkshire entered into a $10 billion 364-day revolving credit agreement. In connection with the PCC acquisition, Berkshire borrowed $10 billion under the credit agreement. In March 2016,~~2017, Berkshire issued ~~€2.75~~€1.1 billion in senior unsecured notes. The notes ~~consisting~~consisted of ~~€1.0 billion of 0.50% notes due in 2020, €1.0 billion of 1.30% notes due in 2024 and €750~~€550 million of ~~2.15% notes due in 2028. Berkshire also issued $5.5 billion in senior unsecured notes consisting of $1.0 billion of 2.20%~~0.25% notes due in 2021 ~~$2.0 billion~~and €550 million of ~~2.75%~~0.625% notes due in ~~2023 and $2.5~~2023. In January 2017, senior notes of $1.1 billion ~~of 3.125% notes due in 2026.~~matured. The ~~proceeds from these debt issues were used~~increase in the ~~repayment~~carrying value of ~~all outstanding borrowings under~~Berkshire’s Euro denominated senior notes in the ~~aforementioned credit agreement. In June 2016,~~first six months of 2017 included $597 million that was charged to earnings as additional interest expense for the ~~revolving credit agreement was terminated. In August 2016, Berkshire issued $750~~first six months of 2017 (including $526 million in ~~senior unsecured notes consisting of $500 million of 1.15% notes due in 2018~~the second quarter) and ~~$250 million of floating rate notes due in 2018, to replace $750 million of maturing debt. Other subsidiary borrowings at September 30, 2016 included $4.7 billion~~resulted from the revaluation attributable to ~~PCC.~~changes in foreign currency exchange rates.

BHE subsidiary debt represents amounts issued pursuant to separate financing agreements. Substantially all of the assets of certain BHE subsidiaries are, or may be, pledged or encumbered to support or otherwise secure debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios. During the first six months of 2017, BHE and its subsidiaries issued approximately $1.275 billion of debt with maturity dates ranging from 2027 to 2057 and a weighted average interest rate of 3.7%.

BNSF’s borrowings are primarily senior unsecured debentures. In ~~May 2016,~~March 2017, BNSF issued $1.25 billion of senior unsecured debentures consisting of $500 million of 3.25% debentures due in 2027 and $750 million of ~~3.9%~~4.125% debentures due in ~~2046.~~2047. In May 2017, $650 million of BNSF debentures matured. As of ~~September~~June 30, ~~2016,~~2017, BNSF, ~~and~~ BHE and their subsidiaries were in compliance with all applicable debt covenants. Berkshire does not guarantee any debt, borrowings or lines of credit of BNSF, BHE or their subsidiaries.

In ~~March 2016,~~January 2017, BHFC issued ~~$3.5~~$1.3 billion of senior notes consisting of $750 million of 1.45% notes due in 2018, $1.0 billion of floating rate notes due in 2018, $1.25 billion of 1.70% notes due in 2019 and $500 million of floating rate notes due in 2019. In August 2016, BHFC issued $1.25 billion of senior notes consisting of $1 billion of 1.30% notes due in 2019 and $250$950 million of floating rate notes due in 2019 ~~primarily to replace $1~~and $350 million of floating rate notes due in 2020. In the first six months of 2017, senior notes of $2.4 billion ~~of maturing debt.~~matured. The borrowings of BHFC, a wholly owned finance subsidiary of Berkshire, are fully and unconditionally guaranteed by Berkshire.

As of ~~September~~June 30, ~~2016,~~2017, our subsidiaries ~~also~~ had unused lines of credit and commercial paper capacity aggregating approximately ~~$8.2~~$8.4 billion to support short-term borrowing programs and provide additional liquidity. Such unused lines of credit included about ~~$4.0~~$4.8 billion related to BHE and its subsidiaries. In addition to BHFC’s borrowings, at June 30, 2017, Berkshire ~~guarantees certain~~guaranteed approximately $2.6 billion of other subsidiary ~~borrowings, which aggregated approximately $3.2 billion at September 30, 2016.~~borrowings. Generally, Berkshire’s guarantee of a subsidiary’s debt obligation is an absolute, unconditional and irrevocable guarantee for the full and prompt payment when due of all ~~present and future~~ payment obligations.

Our financial assets and liabilities are summarized below as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, U.S. Treasury Bills, receivables and accounts payable, accruals and other liabilities are considered to be reasonable estimates of their fair values.


	Carrying Value		Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value		Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
June 30, 2017
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$ 4,565		$ 4,565		$ 3,318		$ 1,247		$ —		$ 4,792		$ 4,792		$ 3,326		$ 1,466		$ —
States, municipalities and political subdivisions		1,279		1,279		—		1,279		—		1,103		1,103		—		1,103		—
Foreign governments		9,795		9,795		7,704		2,091		—		8,922		8,922		7,143		1,779		—
Corporate bonds		7,789		7,789		—		7,682		107		7,559		7,559		—		7,552		7
Mortgage-backed securities		1,219		1,219		—		1,219		—		1,035		1,035		—		1,035		—
Investments in equity securities		102,535		102,535		102,534		—		1		137,113		137,113		137,104		8		1
Investment in Kraft Heinz common stock		15,711		29,130		29,130		—		—		15,584		27,871		27,871		—		—
Other investments		17,493		17,493		376		—		17,117		20,234		20,234		—		20,234		—
Loans and finance receivables		13,213		13,650		—		14		13,636		14,559		15,015		—		1,095		13,920
Derivative contract assets⁽¹⁾		105		105		1		5		99		123		123		2		15		106
Derivative contract liabilities:
Railroad, utilities and energy⁽¹⁾		198		198		5		161		32		139		139		2		120		17
Finance and financial products:
Equity index put options		3,973		3,973		—		—		3,973		2,494		2,494		—		—		2,494
Notes payable and other borrowings:
Insurance and other		27,514		29,119		—		29,119		—		27,781		28,489		—		28,489		—
Railroad, utilities and energy		58,811		69,130		—		69,130		—		60,701		68,603		—		68,603		—
Finance and financial products		15,473		16,251		—		15,862		389		13,788		14,296		—		13,973		323

December 31, 2015
December 31, 2016
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$ 3,427		$ 3,427		$ 2,485		$ 942		$ —		$ 4,527		$ 4,527		$ 3,099		$ 1,428		$—
States, municipalities and political subdivisions		1,764		1,764		—		1,764		—		1,216		1,216		—		1,216		—
Foreign governments		11,468		11,468		9,188		2,280		—		9,001		9,001		7,237		1,764		—
Corporate bonds		7,926		7,926		—		7,826		100		7,604		7,604		—		7,540		64
Mortgage-backed securities		1,442		1,442		—		1,442		—		1,117		1,117		—		1,117		—
Investments in equity securities		111,822		111,822		111,786		35		1		122,032		122,032		122,031		—		1
Investment in Kraft Heinz common stock		15,714		23,679		23,679		—		—		15,345		28,418		28,418		—		—
Investment in Kraft Heinz Preferred Stock		7,710		8,363		—		—		8,363
Other investments		21,717		21,717		315		—		21,402		17,256		17,256		—		—		17,256
Loans and finance receivables		12,772		13,112		—		16		13,096		13,300		13,717		—		13		13,704
Derivative contract assets⁽¹⁾		103		103		—		5		98		142		142		5		43		94
Derivative contract liabilities:
Railroad, utilities and energy⁽¹⁾		237		237		13		177		47		145		145		3		114		28
Finance and financial products:
Equity index put options		3,552		3,552		—		—		3,552		2,890		2,890		—		—		2,890
Credit default		284		284		—		—		284
Notes payable and other borrowings:
Insurance and other		14,599		14,773		—		14,773		—		27,175		27,712		—		27,712		—
Railroad, utilities and energy		57,739		62,471		—		62,471		—		59,085		65,774		—		65,774		—
Finance and financial products		11,951		12,363		—		11,887		476		15,384		15,825		—		15,469		356

The fair values of substantially all of our financial instruments were measured using market or income approaches. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the fair values presented are not necessarily indicative of the amounts that could be realized in an actual current market exchange. The use of alternative market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

Level 1—Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2—Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments of the issuer or entities in the same industry sector.

Level 3—Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and it may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets or liabilities.

Reconciliations of assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the ~~nine~~six months ending ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 follow (in millions).


	Investments in fixed maturity securities				Investments in equity securities and other investments				Net derivative contract liabilities				Investments in fixed maturity securities		Investments in equity securities and other investments				Net derivative contract liabilities
Nine months ending September 30, 2016
Six months ending June 30, 2017
Balance at December 31, 2016														$ 64		$	17,257			$	(2,824	)
Gains (losses) included in:
Earnings														—			—				473
Other comprehensive income														1			1,156				(2	)
Regulatory assets and liabilities														—			—				(2	)
Acquisitions, dispositions and settlements														(58)			—				(50	)
Transfers into/out of Level 3														—			(18,412	)			—

Balance at June 30, 2017														$ 7		$	1			$	(2,405	)

Six months ending June 30, 2016
Balance at December 31, 2015		$	100			$	21,403			$	(3,785	)		$100		$	21,403			$	(3,785	)
Gains (losses) included in:
Earnings			—				2,409				(221	)		—			—				(737	)
Other comprehensive income			3				(2,233	)			(2	)		1			(927	)			—
Regulatory assets and liabilities			—				—				(12	)		—			—				(11	)
Acquisitions, dispositions and settlements			5				(4,461	)			(81	)		5			—				(35	)
Transfers into/out of Level 3			(1	)			—				195			(1)			—				195

Balance at September 30, 2016		$	107			$	17,118			$	(3,906	)
Balance at June 30, 2016														$105		$	20,476			$	(4,373	)

Nine months ending September 30, 2015
Balance at December 31, 2014		$	8			$	21,996			$	(4,759	)
Gains (losses) included in:
Earnings			—				—				467
Other comprehensive income			—				(1,722	)			(5	)
Regulatory assets and liabilities			—				—				(21	)
Acquisition, dispositions and settlements			103				—				(65	)
Transfers into/out of Level 3			—				—				3

Balance at September 30, 2015		$	111			$	20,274			$	(4,380	)

Gains and losses included in earnings are included as components of investment gains/losses, derivative gains/losses orand other revenues, as appropriate and are primarily related to changes in the ~~fair~~ values of derivative contracts and settlement transactions. Gains and losses included in other comprehensive income are primarily ~~represent~~ the net change in unrealized appreciation of ~~investments. In~~investments and the ~~third quarter~~reclassification of ~~2016,~~investment appreciation in net earnings, as appropriate in our ~~investment in Wrigley preferred stock was redeemed.~~Consolidated Statements of Comprehensive Income.

As disclosed in Note 7, we expect to exercise our BAC Warrants in the third quarter of 2017 using the BAC Preferred as consideration and additionally, RBI intends to redeem our RBI Preferred investment. As of June 30, 2017, we based our valuations of these investments on these expectations and we significantly reduced expected durations and effectively eliminated the discounts for transferability and other restrictions. As a result, we concluded the Level 3 inputs used in the previous fair value determinations of our investments in BAC Warrants and RBI Preferred were not significant and that the valuations of such investments were Level 2 measurements as of June 30, 2017.

Quantitative information as of ~~September~~June 30, ~~2016,~~2017, with respect to significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) follows (in millions).

Other investments consist of perpetual preferred stocks and common stock warrants that we acquired in private placement transactions. These investments are subject to contractual restrictions on transferability and may contain provisions that prevent us from economically hedging our investments. In applying discounted estimated cash flow techniques in valuing the perpetual preferred stocks, we made assumptions regarding the expected durations of the investments, as the issuers may have the right to redeem or convert these investments. We also made estimates regarding the impact of subordination, as the preferred stocks have a lower priority in liquidation than debt instruments of the issuers. In valuing the common stock warrants, we used a warrant valuation model. While most of the inputs to the model are observable, we are subject to the aforementioned contractual restrictions and we have applied discounts with respect to such restrictions. Increases or decreases to these inputs would result in decreases or increases to the fair values of the investments.

Our equity index put option contracts are illiquid and contain contract terms that are not standard in derivatives markets. For example, we are not required to post collateral under most of our contracts and ~~many~~certain of the contracts have relatively long durations. For these and other reasons, we classified these contracts as Level 3. The methods we use to value these contracts are those that we believe market participants would use in determining exchange prices with respect to our contracts.

We value equity index put option contracts based on the Black-Scholes option valuation model. Inputs to this model include ~~the~~ index price, contract duration and dividend and interest ~~rates~~rate inputs (including a Berkshirenon-performance input) which are observable. However, we believe that the valuation of long-duration options using any model is inherently subjective and, given the lack of observable transactions and prices, acceptable values may be subject to wide ranges. Volatility inputs represent our expectations, which consider the remaining duration of each contract and assume that the contracts will remain outstanding until the expiration ~~dates without offsetting transactions occurring in the interim.~~dates. Increases or decreases in the volatility inputs will produce increases or decreases in the fair values of the liabilities.

Changes in Berkshire’s issued, treasury and outstanding common stock during the first ~~nine~~six months of ~~2016~~2017 are shown in the table below.

Each Class A common share is entitled to one vote per share. Class B common stock possesses dividend and distribution rights equal toone-fifteen-hundredth (1/1,500) of such rights of Class A common stock. Each Class B common share possesses voting rights equivalent toone-ten-thousandth (1/10,000) of the voting rights of a Class A share. Unless otherwise required under Delaware General Corporation Law, Class A and Class B common shares vote as a single class. Each share of Class A common stock is convertible, at the option of the holder, into 1,500 shares of Class B common stock. Class B common stock is not convertible into Class A common stock. On an equivalent Class A common stock basis, there were ~~1,644,031~~1,644,603 shares outstanding as of ~~September~~June 30, ~~2016~~2017 and ~~1,643,393~~1,644,321 shares outstanding as of December 31, ~~2015.~~2016. In addition to our common stock, 1,000,000 shares of preferred stock are authorized, but none are issued.

A summary of the net changes inafter-tax accumulated other comprehensive income attributable to Berkshire Hathaway shareholders and significant amounts reclassified out of accumulated other comprehensive income for the ~~nine~~six months ending ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 follows (in millions).


	Unrealized appreciation of investments			Foreign currency translation				Prior service and actuarial gains/losses of defined benefit pension plans			Other				Accumulated Other Comprehensive income				Unrealized appreciation of investments, net				Foreign currency translation				Prior service and actuarial gains/losses of defined benefit pension plans				Other			Accumulated other comprehensive income
Nine months ending September 30, 2016
Balance at December 31, 2015		$	38,598		$	(3,856	)		$	(762)		$	2			$	33,982
2017
Balance at December 31, 2016																				$	43,176			$	(5,268	)		$	(593)			$	(17)		$	37,298
Other comprehensive income, net before reclassifications			(912)			(101	)			(39)			(26	)			(1,078	)			8,540				1,221				(64)				(7)			9,690
Reclassifications from accumulated other comprehensive income			(3,188)			—				59			23				(3,106	)
Reclassifications from accumulated other comprehensive income into net earnings																					(383	)			—				34				13			(336	)

Balance at September 30, 2016		$	34,498		$	(3,957	)		$	(742)		$	(1	)		$	29,798
Balance at June 30, 2017																				$	51,333			$	(4,047	)		$	(623	)		$	(11)		$	46,652

Reclassifications from other comprehensive income into net earnings:
Reclassifications into net earnings:
Investment gains/losses		$	(4,904)		$	—			$	—		$	—			$	(4,904	)		$	(589	)		$	—			$	—			$	—		$	(589	)
Other			—			—				79			41				120				—				—				45				24			69

Reclassifications before income taxes			(4,904)			—				79			41				(4,784	)			(589	)			—				45				24			(520	)
Applicable income taxes			(1,716)			—				20			18				(1,678	)			(206	)			—				11				11			(184	)

		$	(3,188)		$	—			$	59		$	23			$	(3,106	)		$	(383	)		$	—			$	34			$	13		$	(336	)

2016
Balance at December 31, 2015																				$	38,598			$	(3,856)			$	(762)			$	2		$	33,982
Other comprehensive income, net before reclassifications																					(1,971	)			(78	)			(5)				(22)			(2,076	)
Reclassifications from accumulated other comprehensive income into net earnings																					(1,180	)			—				35				16			(1,129	)

Balance at June 30, 2016																				$	35,447			$	(3,934)			$	(732)			$	(4)		$	30,777

Reclassifications into net earnings:
Investment gains/losses																				$	(1,816	)		$	—			$	—			$	—		$	(1,816	)
Other																					—				—				51				35			86

Reclassifications before income taxes																					(1,816	)			—				51				35			(1,730	)
Applicable income taxes																					(636	)			—				16				19			(601	)

																				$	(1,180	)		$	—			$	35			$	16		$	(1,129	)

We are parties in a variety of legal actions that routinely arise out of the normal course of business, including legal actions seeking to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. We do not believe that such normal and routine litigation will have a material effect on our financial condition or results of operations. Berkshire and certain of its subsidiaries are also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We believe that any liability that may arise as a result of other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.

We own a 50% interest in a joint venture, Berkadia Commercial Mortgage LLC (“Berkadia”), with Leucadia National Corporation (“Leucadia”) owning the other 50% interest. Berkadia is a servicer of commercial real estate loans in the U.S., performing primary, master and special servicing functions for U.S. government agency programs, commercial mortgage-backed securities transactions, banks, insurance companies and other financial institutions. A significant source of funding for Berkadia’s operations is through the issuance of commercial paper. Repayment of the commercial paper is supported by a surety policy issued by a Berkshire insurance subsidiary. Leucadia has agreed to indemnify us for one-half of any losses incurred under the policy. Berkadia’s maximum outstanding balance of commercial paper borrowings is currently limited to $1.5 billion. On September 30, 2016, the aggregate amount of Berkadia commercial paper outstanding was $1.47 billion.

In the third quarter of 2016, ~~our wholly-owned subsidiary, National Indemnity Company~~NICO entered into a definitive agreement to acquire Medical Liability Mutual Insurance Company (“MLMIC”), a writer of medical professional liability insurance domiciled in New York. MLMIC’s assets and policyholders’ surplus determined under statutory accounting principles as of ~~June 30, 2016~~March 31, 2017 were approximately ~~$5.5~~$5.6 billion and ~~$1.9~~$2.1 billion, respectively. The acquisition price will be an amount equal to the sum of: (i) the tangible book value of MLMIC at the closing date (determined under U.S. GAAP); plus (ii) $100 million. The acquisition will involve the conversion of MLMIC from a mutual company to a stock company. The closing of the transaction is subject to various regulatory approvals, customary closing conditions and the approval of the MLMIC policyholders eligible to vote on the proposed demutualization and sale. ~~The~~We currently expect this transaction ~~is currently expected to~~will be completed in late 2017.

We own a 50% interest in a joint venture, Berkadia Commercial Mortgage LLC (“Berkadia”), with Leucadia National Corporation (“Leucadia”) owning the other 50% interest. Berkadia is a servicer of commercial real estate loans in the U.S. A significant source of funding for Berkadia’s operations is through the issuance of commercial paper, which is limited to $1.5 billion. Berkadia’s commercial paper outstanding is supported by a surety policy issued by a Berkshire insurance subsidiary. Leucadia has agreed to indemnify us forone-half of any losses we incur under the policy.

On July 7, 2017, Berkshire Hathaway Energy Company (“BHE”) agreed to acquire 80.03% of the outstanding equity interests of Oncor Electric Delivery Company LLC (“Oncor”) for $9 billion pursuant to an agreement between BHE and Energy Future Holdings Corp. (“EFH”). Since April 2014, EFH and the substantial majority of its direct and indirect subsidiaries, excluding Oncor, have operated asdebtors-in-possession under the jurisdiction of the U.S. Bankruptcy Court and pursuant to Chapter 11 of the U.S. Bankruptcy Code.

Oncor is a regulated electricity transmission and distribution company that operates the largest transmission and distribution system in Texas, delivering electricity to more than 3.4 million homes and businesses and operating more than 122,000 miles of transmission and distribution lines. Texas Transmission Investment LLC owns 19.75% and certain Oncor directors, employees and retirees own the remaining 0.22% of Oncor’s equity interests. BHE intends to acquire the remaining 19.97% minority interest positions in Oncor through transactions separate from the agreement with EFH.

The completion of this transaction is subject to numerous approvals, rulings and conditions, including those from the U.S. Bankruptcy Court, the Public Utility Commission of Texas and the Federal Energy Regulatory Commission (“FERC”), and the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Subject to obtaining the necessary approvals, we expect the transaction between BHE and EFH will close in the fourth quarter of 2017.

Our operating businesses include a large and diverse group of insurance, finance, manufacturing, service and retailing businesses. Our ~~manufacturing~~reportable business segments are organized in a manner that reflects how management views those business activities. Certain businesses ~~include PCC~~have been grouped together for segment reporting based upon similar products or product lines, marketing, selling and ~~Duracell, which were acquired in the first quarter of 2016.~~distribution characteristics, even though those business units are operated under separate local management. Revenues by segment for the second quarter and first six months of 2017 and 2016 were as follows (in millions).


										Second Quarter				First Six Months
										2017		2016		2017		2016
Operating Businesses:
Insurance group:
Underwriting:
GEICO										$	7,244	$	6,247	$	14,089	$	12,297
General Re											1,578		1,389		2,969		2,779
Berkshire Hathaway Reinsurance Group											1,786		1,652		13,627		3,895
Berkshire Hathaway Primary Group											1,759		1,511		3,435		2,952
Investment income											1,284		1,236		2,416		2,385

Total insurance group											13,651		12,035		36,536		24,308
BNSF											5,250		4,585		10,435		9,352
Berkshire Hathaway Energy											4,623		4,299		8,880		8,417
Manufacturing											12,738		12,201		24,835		22,755
McLane Company											12,581		12,049		24,682		23,850
Service and retailing											6,550		6,385		12,643		12,276
Finance and financial products											2,033		1,989		3,898		3,715

											57,426		53,543		121,909		104,673
Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses											225		663		1,000		1,703
Eliminations and other											(133)		48		(204)		41

										$	57,518	$	54,254	$	122,705	$	106,417


Earnings before income taxes by segment were as follows (in millions).									Earnings before income taxes by segment were as follows (in millions).

	Third Quarter				First Nine Months					Second Quarter				First Six Months
	2016		2015		2016		2015			2017		2016		2017		2016
Operating Businesses:
Insurance group:
Underwriting:
GEICO	$	138	$	258	$	552	$	471		$	119	$	150	$	294	$	414
General Re		100		(2)		144		58			25		2		(118)		44
Berkshire Hathaway Reinsurance Group		(19)		199		86		247			(400)		184		(1,000)		105
Berkshire Hathaway Primary Group		190		188		485		566			232		174		421		295
Investment income		1,029		1,045		3,406		3,466			1,283		1,235		2,412		2,377

Total insurance group		1,438		1,688		4,673		4,808			1,259		1,745		2,009		3,235
BNSF		1,633		1,839		4,129		5,047			1,537		1,238		2,882		2,496
Berkshire Hathaway Energy		1,246		1,153		2,481		2,398			670		666		1,285		1,235
Manufacturing		1,981		1,259		5,150		3,857			1,939		1,687		3,426		3,169
McLane Company		106		106		371		384			69		129		157		265
Service and retailing		449		378		1,230		1,260			555		457		948		781
Finance and financial products		517		486		1,578		1,480			508		583		974		1,061

		7,370		6,909		19,612		19,234			6,537		6,505		11,681		12,242
Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses		3,608		7,502		5,311		9,105			225		663		1,000		1,703
Income from Kraft Heinz		225		98		851		329			309		386		548		626
Interest expense, not allocated to segments		(201)		(83)		(518)		(391)			(646)		31		(857)		(317)
Eliminations and other		(477)		(354)		(903)		(712)			(296)		(213)		(555)		(426)

	$	10,525	$	14,072	$	24,353	$	27,565		$	6,129	$	7,372	$	11,817	$	13,828

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net earnings attributable to Berkshire Hathaway shareholders are disaggregated in the table that follows. Amounts are ~~in millions.~~after deducting income taxes and exclude earnings attributable to noncontrolling interests (in millions).


	Third Quarter						First Nine Months				Second Quarter				First Six Months
	2016			2015			2016		2015		2017		2016		2017		2016
Insurance – underwriting	$	272		$	414		$	822	$	856	$	(22)	$	337	$	(289)	$	550
Insurance – investment income		850			840			2,747		2,692		965		978		1,873		1,897
Railroad		1,020			1,156			2,576		3,164		958		772		1,796		1,556
Utilities and energy		932			786			1,855		1,709		516		482		1,017		923
Manufacturing, service and retailing		1,702			1,177			4,461		3,609		1,662		1,493		2,979		2,759
Finance and financial products		337			303			1,044		962		332		396		635		707
Investment and derivative gains/losses		2,347			4,877			4,593		5,920		143		394		647		2,246
Other		(262	)		(125	)		(310)		(307)		(292)		149		(336)		(48)

Net earnings attributable to Berkshire Hathaway shareholders	$	7,198		$	9,428		$	17,788	$	18,605	$	4,262	$	5,001	$	8,322	$	10,590

Through our subsidiaries, we engage in a number of diverse business activities. ~~Our~~We manage our operating businesses ~~are managed~~ on an unusually decentralized basis. There are essentially no centralized or integrated business functions (such as sales, marketing, purchasing, legal or human resources) and there is minimal involvement by our corporate headquarters in theday-to-day business activities of the operating businesses. Our senior corporate management team participates in and is ultimately responsible for significant capital allocation decisions, investment activities and the selection of the Chief Executive to head each of the operating businesses. It also is responsible for establishing and monitoring Berkshire’s corporate governance practices, including, but not limited to, communicating the appropriate “tone at the top” messages to ~~its~~ employees and associates, monitoring governance efforts, including those at the operating businesses, and participating in the resolution of governance-related issues as needed. The business segment data (Note 2122 to the accompanying Consolidated Financial Statements) should be read in conjunction with this discussion.

~~Earnings of our~~Our insurance businesses generatedafter-tax losses from underwriting ~~operations were lower~~ in the ~~third~~second quarter and first ~~nine~~six months of 2017. These losses included foreign currency exchange rate losses from the revaluation of reinsurance liabilities denominated in foreign currencies of $122 million in the second quarter and $196 million in the first six months of 2017. Ourafter-tax underwriting earnings in 2016 included foreign currency exchange rate gains of $185 million in the second quarter and $223 million in the first six months. Additionally, underwriting results in 2017 declined as compared to ~~2015. In~~2016 due to decreased earnings from the ~~first nine months~~re-estimation of ~~2016, the Berkshire Hathaway Reinsurance~~ultimate liabilities for prior years’ loss events, higher losses from current year catastrophe events and ~~Primary Groups generated lower net underwriting earnings while GEICO and General Re had earnings increases.~~increased deferred charge amortization on retroactive reinsurance contracts. Our railroad business generated ~~lower net~~comparative increases in earnings in the ~~third~~second quarter and first ~~nine~~six months of 2017 compared to 2016, ~~primarily due to a 6.6% year-to-date decline in~~reflecting increased unit ~~volume. Earnings of our utilities~~volume, partly offset by increased fuel and other costs. Our utility and energy ~~businesses increased~~business produced higher earnings in the ~~third~~second quarter and first ~~nine~~six months of 2017 compared to 2016, ~~which was attributable to increased pre-tax earnings and~~reflecting lower effective income tax rates. ~~The increases in net earnings from~~Earnings of our manufacturing, service and retailing businesses in 2017 increased 11.3% in the second quarter and 8.0% in the first six months compared to the same periods in 2016. These increases reflected comparatively higher earnings from several of our larger operations and the impact of ~~the PCC~~businesses acquired in 2016 (PCC and ~~Duracell acquisitions,~~Duracell), partly offset by ~~lower aggregate earnings from~~losses and impairment charges related to the ~~other businesses within this group.~~disposition of a priorbolt-on acquisition by one of our manufacturing businesses.

After-tax investment and derivative gains in the ~~third~~second quarter and first ~~nine~~six months of 2017 were ~~approximately $2.3~~$143 million and $647 million, respectively, and $394 million and $2.25 billion in the second quarter and ~~$4.6 billion, respectively, in~~first six months of 2016, ~~compared to $4.9 billion and $5.9 billion, respectively, in 2015.~~ respectively.After-tax investment gains in the ~~third quarter~~first six months of 2016 included ~~approximately $1.6 billion from the sale of our Wrigley preferred stock investment and in the first nine months also included~~ anon-cash ~~gains~~ gain of approximately $1.9 billion related to the exchange of P&G common stock for 100% of the common stock of Duracell. ~~After-tax investment and derivative gains in the third quarter of 2015 included non-cash holding gains of approximately $4.4 billion in connection with our investment in Kraft Heinz common stock.~~ We believe that investment and derivative gains/losses are often meaningless in terms of understanding our reported results or evaluating our economic performance. Investment and derivative gains and losses have caused and will likely continue to cause significant volatility in our periodic earnings. Other earnings in 2017 are net ofafter-tax foreign currency exchange rate losses of $342 million in the second quarter and $399 million for the first six months from the revaluation of parent company Euro denominated notes payable. In 2016, other earnings includedafter-tax foreign currency exchange rate gains of $101 million in the second quarter and losses of $60 million in the first six months from the revaluation of Euro denominated notes payable.

We engage in both primary insurance and reinsurance of property/casualty, life and health risks. In primary insurance activities, we assume defined portions of the risks of loss from persons or organizations that are directly subject to the risks. In reinsurance activities, we assume defined portions of similar or dissimilar risks that other insurers or reinsurers have subjected themselves to in their own insuring activities. Our insurance and reinsurance businesses ~~are: (1)~~are disaggregated as follows: GEICO, ~~(2)~~ General Re, ~~(3)~~ Berkshire Hathaway Reinsurance Group (“BHRG”) and ~~(4)~~ Berkshire Hathaway Primary Group.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Our management views insurance businesses as possessing two distinct operations – underwriting and investing. Underwriting decisions are the responsibility of the unit managers; investing decisions, with limited exceptions, are the responsibility of Berkshire’s Chairman and CEO, Warren E. Buffett. Accordingly, we evaluate performance of underwriting operations without any allocation of investment income or investment ~~gains.~~gains/losses.

The timing and amount of ~~large property~~ catastrophe losses can produce significant volatility in our periodic underwriting results, particularly with respect to our reinsurance businesses. In the first nine months of 2016, we had no significant catastrophe losses. Based on preliminary estimates, we believe that losses arising from Hurricane Matthew in October 2016 will not be material. In the third quarter of 2015, we recorded estimated losses of $130 million in connection with a property loss event in China. Our periodic underwriting results may be affected significantly by changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years. Actual claim settlements and revised loss estimates will develop over ~~time. Unpaid~~time and the unpaid loss estimates recorded as of the balance sheet date will develop upward or downward in future periods, producing a corresponding decrease or increase topre-tax earnings. ~~Variations~~Our periodic underwriting results may also include significant gains and losses arising from the changes in the valuation ofnon-U.S. Dollar denominated reinsurance liabilities of our U.S. based insurance subsidiaries as a result of foreign currency exchange rate fluctuations. Foreign currency exchange rates can ~~produce~~be volatile and the resulting impact on our underwriting earnings can be relatively ~~significant foreign currency exchange gains and losses in our periodic earnings with respect to non-U.S. dollar liabilities of our U.S.-based insurance subsidiaries.~~

A key marketing strategy of our insurance businesses is the maintenance of extraordinary capital strength. A measure of capital strength is combined shareholders’ equity determined pursuant to U.S. statutory accounting rules (“Statutory Surplus”). Statutory Surplus of our insurance businesses was approximately $124 billion at December 31, 2015. This superior capital strength creates opportunities, especially with respect to reinsurance activities, to negotiate and enter into insurance and reinsurance contracts specially designed to meet the unique needs of insurance and reinsurance buyers.significant. Underwriting results of our insurance businesses are summarized below. Amounts are in millions.


	Third Quarter				First Nine Months				Second Quarter				First Six Months
	2016		2015		2016		2015		2017		2016		2017		2016
Underwriting gain (loss) attributable to:
GEICO	$	138	$	258	$	552	$	471	$	119	$	150	$	294	$	414
General Re		100		(2)		144		58		25		2		(118)		44
Berkshire Hathaway Reinsurance Group		(19)		199		86		247		(400)		184		(1,000)		105
Berkshire Hathaway Primary Group		190		188		485		566		232		174		421		295

Pre-tax underwriting gain		409		643		1,267		1,342
Pre-tax underwriting gain (loss)										(24)		510		(403)		858
Income taxes and noncontrolling interests		137		229		445		486		(2)		173		(114)		308

Net underwriting gain	$	272	$	414	$	822	$	856
Net underwriting gain (loss)									$	(22)	$	337	$	(289)	$	550

GEICO writes private passenger automobile insurance, offering coverages to insureds in all 50 states and the District of Columbia. GEICO’s policies are marketed mainly by direct response methods in which most customers apply for coverage directly to the company via the Internet or over the telephone. This is a significant element in our strategy to be a low-cost auto insurer. In addition, we strive to provide excellent service to customers, with the goal of establishing long-term customer relationships. GEICO’s underwriting results are summarized ~~below. Dollars are~~below (dollars in ~~millions.~~millions).


	Third Quarter								First Nine Months								Second Quarter								First Six Months
	2016				2015				2016				2015				2017				2016				2017				2016
	Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
Premiums written	$	6,977			$	6,141			$	19,771			$	17,618			$	7,270			$	6,229			$	14,857			$	12,794

Premiums earned	$	6,474		100.0	$	5,788		100.0	$	18,771		100.0	$	16,792		100.0	$	7,244		100.0	$	6,247		100.0	$	14,089		100.0	$	12,297		100.0

Losses and loss adjustment expenses		5,335		82.4		4,658		80.4		15,331		81.7		13,673		81.4		6,108		84.3		5,173		82.8		11,698		83.0		9,996		81.3
Underwriting expenses		1,001		15.5		872		15.1		2,888		15.4		2,648		15.8		1,017		14.1		924		14.8		2,097		14.9		1,887		15.3

Total losses and expenses		6,336		97.9		5,530		95.5		18,219		97.1		16,321		97.2		7,125		98.4		6,097		97.6		13,795		97.9		11,883		96.6

Pre-tax underwriting gain	$	138			$	258			$	552			$	471			$	119			$	150			$	294			$	414

Premiums written in the second quarter and first six months of 2017 increased $1.0 billion (16.7%) and $2.1 billion (16.1%), respectively, compared to 2016. Over the past year, voluntary autopolicies-in-force grew approximately 10.2% and premiums per auto policy increased 5.0%. The increase in average premiums per policy was attributable to rate increases, coverage changes and changes in state and risk mix. Voluntary auto new business sales in 2017 increased 17.8% in the second quarter and 24.1% in the first six months compared to the same periods in 2016. Voluntary autopolicies-in-force increased approximately 876,000 during the first six months of 2017. Premiums earned in 2017 increased 16.0% in the second quarter and 14.6% in the first six months compared to the same periods in 2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

~~Premiums written in~~In the ~~third~~second quarter and first ~~nine~~six months of ~~2016 were $7.0 billion and $19.8 billion, respectively, increases of 13.6% and 12.2%, respectively,~~2017, ourpre-tax underwriting gains declined compared to ~~the third quarter and first nine months of 2015. Premiums earned in~~ 2016, ~~increased $686 million (11.9%) in the third quarter and $2.0 billion (11.8%) in the first nine months,~~ as ~~compared to the same periods in 2015. These increases reflected voluntary auto policy-in-force growth of 5.2% and increased average~~claim costs grew faster than premiums per auto policy of approximately 6.9% over the past twelve months, which were attributable to rate increases, coverage changes and changes in state and risk mix. Throughout 2015, we experienced increases in claims frequencies and severities across all of our major coverages. As a result, we implemented premium rate increases as necessary. Voluntary auto new business sales in 2016 increased 16.5% in the third quarter and 6.8% in the first nine months compared to 2015. The significant growth in voluntary auto new business during the third quarter has continued in October. In 2016, voluntary auto policies-in-force increased by approximately 276,000 in the third quarter and 670,000 in the first nine months.

earned. Losses and loss adjustment expenses ~~incurred~~ in ~~2016~~2017 increased ~~$677~~$935 million ~~(14.5%~~(18.1%) in the ~~third~~second quarter and $1.7 billion ~~(12.1%~~(17.0%) in the first ~~nine~~six months ~~as compared to 2015. In 2016, our~~over the corresponding periods in 2016. Our loss ratio (the ratio of losses and loss adjustment expenses to earned premiums) increased ~~2.0~~1.5 percentage points in the ~~third~~second quarter and ~~0.3~~1.7 percentage points in the first ~~nine~~six months of 2017 as compared to ~~2015, reflecting increased storm losses and claims severity, partly offset by the aforementioned premium rate increases.~~2016. Claims frequencies ~~(claim counts per exposure unit)~~ in the first ~~nine~~six months of ~~2016~~2017 were relatively flat for property damage and collision coverages, ~~were relatively unchanged as the decreases experienced in the first quarter were offset by subsequent increases. Claim frequencies~~increased approximately three percent for bodily injury coverage and decreased about two percent for ~~the first nine months of 2016 were relatively unchanged from 2015.~~personal injury protection coverage compared to 2016. Average claims severities were higher in the first ~~nine~~six months of ~~2016~~2017 for ~~physical~~property damage and collision coverages (four to ~~six~~five percent range) and bodily injury coverage ~~(five~~(four to ~~seven~~six percent range). Losses and loss adjustment expenses in the first six months of 2017 and 2016 included reductions of $106 million and $216 million, respectively, from there-estimation of liabilities for prior years’ claims. In addition, ~~storm-related losses (primarily from hail and flooding)~~ in the ~~third quarter and~~ first ~~nine~~six months of ~~2016 were~~2017, we incurred storm losses of approximately ~~$90~~$268 million ~~and $380 million, respectively,~~(1.9% of premiums earned), compared to $5$290 million ~~and $129 million, respectively,~~(2.4% of premiums earned) in the ~~corresponding 2015 periods.~~first six months of 2016.

Underwriting expenses in the ~~third~~second quarter and first ~~nine~~six months of ~~2016 were $1.0 billion and $2.9 billion, respectively, increases of $129~~2017 increased $93 million ~~(14.8%~~(10.1%) and ~~$240~~$210 million ~~(9.1%~~(11.1%), respectively, ~~over 2015.~~compared to 2016. Our expense ~~ratio~~ratios (underwriting expenses to premiums earned) in ~~2016 increased 0.4~~2017 declined 0.7 percentage points in the ~~third~~second quarter and ~~decreased~~ 0.4 percentage points in the first ~~nine~~six months compared to ~~2015.~~2016. The largest components of underwriting expenses are employee-related expenses (salaries and benefits) and advertising costs. ~~The increases in underwriting expenses reflected the increases in policies-in-force.~~

General Re conducts a reinsurance business offering property and casualty coverages to clients worldwide through General Reinsurance Corporation, Germany-based General Reinsurance AG, Faraday Holdings in London and other wholly-owned affiliates. ~~Property and casualty reinsurance is written primarily on a direct basis, but is~~We also ~~written through brokers and intermediaries. Life~~write life and health reinsurance ~~is written~~ primarily on a direct basis through General Re Life Corporation and General Reinsurance AG. ~~General Re strives~~We strive to generate underwriting profits in essentially all of ~~its~~our product lines. ~~Our management does not evaluate underwriting performance based upon market share and our underwriters are instructed to reject inadequately priced risks.~~ General Re’s underwriting results are summarized in the following ~~table. Amounts are in millions.~~table (in millions).


	Premiums earned								Pre-tax underwriting gain (loss)								Premiums earned								Pre-tax underwriting gain (loss)
	Third Quarter				First Nine Months				Third Quarter				First Nine Months				Second Quarter				First Six Months				Second Quarter				First Six Months
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017		2016		2017		2016

Property/casualty	$	643	$	683	$	1,919	$	2,119	$	66	$	(9)	$	119	$	65	$	777	$	624	$	1,431	$	1,276	$	(14)	$	23	$	(157)	$	53
Life/health		746		722		2,249		2,278		34		7		25		(7)		801		765		1,538		1,503		39		(21)		39		(9)

	$	1,389	$	1,405	$	4,168	$	4,397	$	100	$	(2)	$	144	$	58	$	1,578	$	1,389	$	2,969	$	2,779	$	25	$	2	$	(118)	$	44

In the ~~third~~second quarter and first six months of ~~2016,~~2017, property/casualty premiums written were relatively unchanged from 2015, reflecting a modest increase in North America, offset by modestly lower volume in international markets. In the first nine months, property/casualty premiums written in 2016 declined $215earned increased $153 million ~~(9%~~(25%) ~~compared to 2015, primarily due to lower volume in international treaty~~ and ~~broker market business, and to a lesser degree, to unfavorable foreign currency exchange rate changes. In 2016, premiums earned decreased $40~~$155 million ~~(6%~~(12%) ~~in the third quarter and $200 million (9%) in the first nine months~~, respectively, as compared to 2016. The increases reflected higher written premiums in both direct and broker markets, primarily attributable to new business and increased participations for renewals. Despite the ~~same periods~~increase in ~~2015. The declines~~premiums in ~~earned premiums reflected lower volume and unfavorable changes in foreign currency exchange rates. Insurance~~2017, industry capacity dedicated to property and casualty markets remains high and price competition in most ~~property/casualty~~ reinsurance markets persists. We continue to decline business when we believe prices are inadequate. ~~However,~~

Our property/casualty operations generatedpre-tax underwriting losses of $14 million in the second quarter and $157 million in the first six months of 2017 compared topre-tax underwriting gains of $23 million and $53 million, respectively, in the comparable 2016 periods. In the first six months of 2017, we ~~remain prepared~~increased our estimates for unpaid losses approximately $140 million with respect to ~~write substantially more~~certain United Kingdom (“U.K.”) liability business ~~when more appropriate prices can be attained.~~written in prior years. The increase was the result of the U.K. Ministry of Justice’s decision in the first quarter to reduce the fixed discount rate required in lump sum settlement calculations of U.K. personal injury claims. The discount rate, referred to as the Ogden rate, was reduced from 2.5% to negative 0.75%. We expect the Ogden rate decrease will significantly increase claim costs associated with currently unsettled cases, as well as for future cases. Underwriting results in the first six months of 2017 also included estimated losses of $50 million from a cyclone in Australia. General Re incurred no losses from significant catastrophe loss events in the first six months of 2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Life/health premiums earned in the second quarter and first six months of 2017 increased $36 million (5%) and $35 million (2%), respectively, compared to 2016. The increases reflected growth in North America and certain international markets. Our ~~property business generated~~ life/health operations producedpre-tax underwriting gains of ~~$76~~$39 million in the ~~third~~second quarter and ~~$154~~first six months of 2017 compared topre-tax underwriting losses of $21 million in the second quarter and $9 million in the first ~~nine~~six months of ~~2016 compared to gains of $15 million and $114 million, respectively, in the corresponding 2015 periods. There were no significant catastrophe losses during the first nine months of 2016, while~~2016. The improved underwriting results in 2015 included estimated losses of $44 million from an explosion in Tianjin, China during the third quarter. In the first nine months of 2016, we recognized pre-tax gains from reductions of estimated losses on prior years’ business of approximately $160 million, which were relatively unchanged from 2015.

~~Our casualty/workers’ compensation business produced pre-tax~~2017 reflected lower underwriting losses of $10 million in the third quarter and $35 million in the first nine months of 2016 and pre-tax losses of $24 million in the third quarter and $49 million in the first nine months of 2015. Underwriting results in 2016 and 2015 included net losses on current year business and charges for recurring discount accretion on workers’ compensation liabilities and deferred charge amortization on retroactive reinsurance contracts, partially offset by gains from reductions of estimated losses on prior years’ business. Casualty losses tend to be long-tailed and it should not be assumed that favorable loss experience in a given period means that the ultimate liability estimates currently established will continue to develop favorably.

In the third quarter and first nine months of 2016, life/health premiums earned increased $24 million (3%) and decreased $29 million (1%), respectively, compared to 2015. Adjusting for changes in foreign currency exchange rates, premiums earned in 2016 increased $31 million (4%) in the third quarter and $32 million (1%) in the first nine months, reflecting growth across a number of non-U.S. markets, particularly in Asiaexpenses and the ~~United Kingdom. Our life/health business produced pre-tax underwriting gains~~impact of $25 million in the first nine months of 2016 compared to losses of $7 million in the first nine months of 2015. In the first nine months of 2016, underwriting results reflected gains from our international life business offset by losses from the recurring discount accretion on long-term care liabilities and higher than expected individual life claim frequency in North America. Our international underwriting results in 2016 were adversely affected by increasedincreasing liabilities for estimated premium deficiencies on certain disability business in 2016. Underwriting results in the ~~second quarter, partly offset by reductions in both foreign currency exchange~~first six months of 2017 and 2016 includedpre-tax losses from the runoff of U.S. long-term care and disability business of $38 million and $37 million, respectively, which were primarily due to the ~~adverse impact from lower interest rates compared to 2015.~~periodic discount accretion on long-term care liabilities.

BHRG underwritesexcess-of-loss reinsurance and quota-share coverages on property and casualty risks for insurers and reinsurers worldwide, including property catastrophe insurance and reinsurance. BHRG also writes retroactive reinsurance on property/casualty exposures as well as life reinsurance and periodic payment annuity business. A summary of BHRG’s underwriting results ~~are summarized in the table below~~follows (in millions).


	Premiums earned								Pre-tax underwriting gain (loss)										Premiums earned								Pre-tax underwriting gain (loss)
	Third Quarter				First Nine Months				Third Quarter				First Nine Months						Second Quarter				First Six Months				Second Quarter				First Six Months
	2016		2015		2016		2015		2016		2015		2016			2015			2017		2016		2017		2016		2017		2016		2017		2016
Property/casualty	$	1,164	$	1,341	$	3,358	$	3,168	$	40	$	315	$	415		$	737		$	1,183	$	1,067	$	2,271	$	2,194	$	52	$	249	$	(217)	$	375
Retroactive reinsurance		—		1		582		4		(114)		2		(196	)		(283	)		1		2		10,186		582		(331)		9		(590)		(82)
Life and annuity		708		550		1,827		2,145		55		(118)		(133	)		(207	)		602		583		1,170		1,119		(121)		(74)		(193)		(188)

	$	1,872	$	1,892	$	5,767	$	5,317	$	(19)	$	199	$	86		$	247		$	1,786	$	1,652	$	13,627	$	3,895	$	(400)	$	184	$	(1,000)	$	105

~~Premiums written in~~In the ~~third~~second quarter and first ~~nine~~six months of ~~2016 decreased $945~~2017, premiums earned increased $116 million ~~(50.2%~~(11%) and ~~$322~~$77 million ~~(8.2%~~(4%), respectively, compared to ~~2015. The decline during the third quarter was primarily due to the impact~~2016. Approximately half of ~~the quota-share contract with Insurance Australia Group Ltd. (“IAG”), which became effective on July 1, 2015. Premiums~~our premiums written ~~in the third quarter of 2015 included a quota-share percentage of IAG’s unearned premiums in-force as of the effective date. Premiums~~and earned ~~decreased $177 million (13.2%) in the third quarter and increased $190 million (6.0%)~~ in the first ~~nine~~six months ~~compared to 2015. The increase in the first nine months was primarily attributable to increased premiums earned~~of 2017 derived from ~~the IAG contract, partially offset by lower premiums from property business.~~two contracts. Our premium volume ~~is generally~~was constrained for most ~~property/casualty~~ reinsurance coverages, ~~and for property catastrophe reinsurance in particular~~ as rates, in our view, ~~are~~were generally inadequate. ~~However, we~~We have the capacity and desire to write more business when ~~appropriate pricing can be obtained.~~prices are appropriate.

Our property/casualty business generatedpre-tax underwriting gains of ~~$40 million and $415~~$52 million in the ~~third~~second quarter andpre-tax losses of $217 million in the first ~~nine~~six months of 2017, compared topre-tax gains of $249 million in the second quarter and $375 million in the first six months of 2016. In the first six months of 2017, we incurred losses of approximately $250 million related to prior years’ loss events, which included losses from unanticipated reported claims from hurricane and earthquake events in 2016 and increased liability estimates attributable to the Ogden discount rate decrease. In the first six months of 2016, ~~respectively, compared to $315~~we reduced estimated ultimate liabilities for prior years’ loss events by approximately $375 million, and $737 million, respectively, in 2015. In the third quarter of 2015, the property/casualty business incurred losses of $86 million from an explosion in Tianjin, China. The declines in pre-tax underwriting gains in 2016 were primarily due to ~~comparatively~~ lower ~~gains from reductions~~than expected reported losses. In the first six months of 2017, we also incurred estimated losses of approximately $115 million from a cyclone in Australia. In the first six months of 2016, we incurred no significant losses from catastrophe loss events.

We periodically write retroactive reinsurance contracts, which provide indemnification of losses and loss adjustment expenses with respect to past loss events. In January 2017, NICO entered into an aggregateexcess-of-loss retroactive reinsurance agreement with AIG (the “AIG Agreement”) that became effective on ~~prior years’ events.~~February 2, 2017. In connection with the AIG Agreement, we received cash premiums of $10.2 billion. As of the effective date, we recorded losses and loss adjustment expenses incurred of $10.2 billion, representing our initial estimate of the unpaid losses and loss adjustment expenses assumed of $16.4 billion, partly offset by a deferred charge asset of $6.2 billion. Thus, on the effective date, the AIG Agreement had no effect on ourpre-tax underwriting results. See Note 16 to the accompanying Consolidated Financial Statements.

Pre-tax underwriting results in 2017 included losses of $102 million in the second quarter and $191 million in the first six months from changes in foreign currency exchange rates, which increased foreign currency denominated liabilities of U.S subsidiaries. In 2016, foreign currency exchange rate changes reduced such liabilities and resulted inpre-tax gains of $158 million in the second quarter and $177 million in the first six months.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Retroactive reinsurance contracts provide indemnification of losses and loss adjustment expenses with respect to past loss events, and related claims are generally expected to be paid over long periods of time. At the inception of a contract, deferred charge assets are recorded for the excess, if any, of the estimated ultimate losses payable over the premiums earned. Deferred charges are subsequently amortized over the estimated claims payment period based on estimates of the timing and amount of future loss payments. The original estimates of the timing and amount of loss payments are periodically analyzed against actual experience and revised based on an actuarial evaluation of the expected remaining losses. Amortization charges and deferred charge adjustments resulting from changes to the estimated timing and amount of future loss payments are included in periodic earnings.

Pre-tax underwriting results from retroactive reinsurance contracts also include foreign currency transaction gains/losses associated with foreign currency denominated liabilities of U.S.-based subsidiaries. In 2016, foreign currency gains were $21 million in the third quarter and $198 million in the first nine months. In 2015, foreign currency gains were $120 million in the third quarter and $92 million in the first nine months. Before foreign currency gains/losses, retroactive reinsurance contracts producedpre-tax underwriting losses of $229 million and $399 million in the second quarter and first six months of 2017, respectively, and $149 million and $259 million, respectively, in the comparable 2016 periods. The comparative increases in such losses in 2017 were primarily due to deferred charge amortization related to the AIG Agreement and another retroactive reinsurance contract written in December 2016, partly offset by a small net gain from a contract commuted in the first ~~nine months~~quarter of ~~$394 million in 2016~~2017 and ~~$375 million in 2015, primarily from recurring periodic~~comparatively lower deferred charge ~~amortization. Gross unpaid~~amortization from other contracts. We currently estimatepre-tax deferred charge amortization for the year ending December 31, 2017 will approximate $975 million, which includes the aforementioned AIG Agreement.

Liabilities for losses ~~assumed under~~and loss adjustment expenses associated with our retroactive reinsurance contracts were approximately ~~$23.7~~$40.1 billion at ~~September~~June 30, ~~2016~~2017 and $24.7 billion at December 31, ~~2015.~~2016. Unamortized deferred charges related to ~~such reinsurance~~these contracts were approximately ~~$7.4~~$13.5 billion at ~~September~~June 30, ~~2016~~2017 and ~~$7.6~~$8.0 billion at December 31, ~~2015.~~2016.

A summary of BHRG’s life and annuity underwriting results ~~are summarized as follows. Amounts are in millions.~~follows (in millions).


	Premiums earned								Pre-tax underwriting gain (loss)								Premiums earned								Pre-tax underwriting gain (loss)
	Third Quarter				First Nine Months				Third Quarter				First Nine Months				Second Quarter				First Six Months				Second Quarter				First Six Months
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017		2016		2017		2016
Periodic payment annuity	$	367	$	195	$	771	$	1,062	$	(61)	$	(6)	$	(123)	$	(159)	$	230	$	195	$	450	$	404	$	(198)	$	8	$	(343)	$	(62)
Life reinsurance		337		350		1,043		1,068		(9)		(13)		5		(81)		368		383		712		706		3		3		(2)		14
Variable annuity guarantee		4		5		13		15		125		(99)		(15)		33		4		5		8		9		74		(85)		152		(140)

	$	708	$	550	$	1,827	$	2,145	$	55	$	(118)	$	(133)	$	(207)	$	602	$	583	$	1,170	$	1,119	$	(121)	$	(74)	$	(193)	$	(188)

~~Premiums earned~~Periodic payment annuity premiums consist of upfront consideration received under direct and assumed contracts that provide for structured settlement annuity payments, typically over very long periods.Pre-tax underwriting losses in 2017 included losses of $86 million in the second quarter and $110 million in the first six months from changes in foreign currency exchange rates. In 2016, foreign currency exchange rate changes resulted inpre-tax gains of $126 million in the second quarter and $166 million in the first six months.

Before foreign currency gains and losses,pre-tax underwriting losses from periodic payment annuity contracts ~~increased $172~~were $112 million (88.2%) in the third quarter and declined $291 million (27.4%) in the first nine months compared to 2015. Premiums earned in 2016 increased in the third quarter due to increased direct annuity volume, which for the first nine months was more than offset by the impact of a sizable reinsurance contract written in the second quarter ~~of 2015.~~

~~Periodic payment annuity contracts generated pre-tax underwriting losses of $61 million in the third quarter~~ and ~~$123~~$233 million in the first ~~nine~~six months of ~~2016~~2017 and $6$118 million and $228 million, respectively, in the ~~third~~second quarter and ~~$159 million in the~~ first ~~nine~~six months of ~~2015. Our~~2016. We expect these contracts will generatepre-tax underwriting losses over time attributable to the accretion of discounted annuity liabilities. Discounted periodic payment annuity liabilities ~~under~~were approximately $10.6 billion at June 30, 2017, reflecting a weighted average interest rate of approximately 4.1%.

Our underwriting results in 2017 from life reinsurance included higher than expected mortality, partially offset by decreased benefit liabilities for certain blocks of business. Underwriting gains in 2016 reflected lower claims and underwriting expenses.

Underwriting results of our variable annuity business (reinsurance contracts that provide guarantees on closed blocks of a U.S. subsidiary are denominated in foreign currencies, most significantly the Great Britain Pound (“GBP”). In 2016, the value of the U.S. Dollar strengthened versus the GBP, producing reductions in our liabilities in U.S. Dollars and resulting in pre-tax gains of $216 millionvariable annuity business) in the first nine months of 2016 and $53 million in the first nine months of 2015. Before the impact of foreign currency exchange rate changes, pre-tax underwriting losses from annuity contracts were $111 million and $339 million in the thirdsecond quarter and first ~~nine~~six months of ~~2016, respectively, compared to $66~~2017 producedpre-tax underwriting gains of $74 million and ~~$212~~$152 million, respectively, andpre-tax underwriting losses of $85 million and $140 million, respectively, in the corresponding ~~2015 periods. This business is expected to generate underwriting~~periods of 2016. Underwriting gains and losses ~~attributable to the recurring accretion of discounted annuity liabilities. The increases~~ in ~~underwriting losses (before foreign currency impacts)~~each period reflected ~~increased~~changes in liabilities for guaranteed benefits, resulting from ~~new business written over the past two years~~changes in securities markets and ~~the impact of lower~~ interest rates and from the periodic recognition of expected profit margins, which ~~increased expected future loss payments under certain reinsurance contracts. Aggregate~~together, affected our liability estimates. Our estimated liabilities for variable annuity ~~liabilities~~guarantees were approximately ~~$9.6~~$1.9 billion at ~~September~~June 30, ~~2016~~2017 and ~~$8.7~~$2.1 billion at December 31, ~~2015.~~2016. Periodic underwriting results from these contracts can be volatile reflecting the volatility of securities markets.

The Berkshire Hathaway Primary Group (“BH Primary”) consists of a wide variety of independently managed insurance underwriting businesses that primarily provide a variety of commercial insurance products, including healthcare malpractice, workers’ compensation, automobile, general liability, property and various specialty coverages for small, medium and large clients. The largest of these insurers include the third quarter and first nine months of 2016, life reinsurance premiums were relatively unchanged compared to 2015. The life reinsurance business produced a pre-tax underwriting loss of $9 million in the third quarter and a pre-tax gain of $5 million in the first nine months of 2016. Underwriting losses of $81 million in the first nine months of 2015 included losses of $53 million incurred in connection with business terminated in the second quarter.MedPro Group, National Indemnity Company (“NICO Primary”), Berkshire Hathaway Homestate

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Our variable annuity business primarily consists of contracts that provide guarantees on closed blocks of variable annuity business written by other insurers. The periodic underwriting gains and losses in each period reflect changes in liabilities for guaranteed benefits which are impacted by changes in securities markets and interest rates. Periodic results from these contracts can be volatile reflecting changes in investment market conditions, which impact the underlying insured exposures. In the third quarter of 2016, the pre-tax underwriting gains were primarily due to better than expected equity market performance, which was more than offset in the first nine months of 2016 by lower interest rates. In the third quarter of 2015, pre-tax underwriting losses were primarily due to lower equity markets and interest rates which partly offset the underwriting gains in the first six months.

The Berkshire Hathaway Primary Group (“BH Primary”) consists of several independently managed insurance businesses. These businesses include: MedPro Group, providers of healthcare malpractice insurance coverages; National Indemnity Company’s primary group (“NICO Primary”), writers of commercial motor vehicle and general liability coverages; U.S. Investment Corporation, whose subsidiaries underwrite specialty insurance coverages; a group of companies referred to as Berkshire Hathaway Homestate Companies (“BHHC”), ~~providers of commercial multi-line and workers’ compensation insurance;~~ Berkshire Hathaway Specialty Insurance (“BH Specialty”)~~, which concentrates on providing large scale insurance solutions for commercial property~~ and ~~casualty risks; Applied Underwriters, a provider of integrated workers’ compensation solutions;~~ Berkshire Hathaway GUARD Insurance Companies (“GUARD”)~~, providers of workers’ compensation and commercial property and casualty insurance coverage to small and mid-sized businesses;~~. Other BH Primary insurers include U.S. Liability Insurance Company, Applied Underwriters and Central States Indemnity ~~Company, a provider~~Company. A summary of ~~credit~~BH Primary’s underwriting results follows (dollars in millions).

~~Premiums earned~~first six months in 2017 increased 8.9% and 13.2%, respectively, over the same periods in 2016. All of the BH Primary insurers generated increased premiums written in the first ~~nine~~six months of ~~2016 were $4.58 billion, an increase of 16.0%~~2017, led by BH Specialty (23%), GUARD (28%) and BHHC (11%). Premiums earned increased $248 million (16.4%) in the second quarter and $483 million (16.4%) in the first six months as compared to ~~2015. The increase~~2016 reflecting the increases in premiums ~~was primarily attributable to volume increases from BH Specialty, MedPro Group, BHHC and GUARD.~~ written.

The BH Primary insurers produced ~~aggregate~~ pre-tax underwriting gains of ~~$485~~$232 million in the second quarter and $421 million in the first ~~nine~~six months of 2017. Losses and loss adjustment expenses for the first six months of 2017 included net reductions of estimated ultimate liabilities for prior years’ loss events of $426 million, which produced a corresponding increase inpre-tax underwriting gains. Underwriting results in the first six months of 2016 ~~and $566~~included gains of $236 million ~~in 2015. Combined loss ratios were 61% in~~from the ~~first nine months~~net reductions of ~~2016 and 59% in 2015.~~estimated ultimate claims liabilities for prior years’ events. The ~~comparative increase in~~gains from the ~~loss ratio reflected comparative declines in favorable loss~~ development of prior years’ ~~loss events, partly offset by lower loss ratios on current year~~claim estimates in 2017 were primarily attributable to healthcare malpractice and workers’ compensation business. ~~Our primary insurers~~Many of our businesses write ~~considerable amounts of~~primarily liability and workers’ compensation business and the related claim costs may be subject to higher severity and longer-claims tails, which ~~can have extended claim tails. It should not be assumed that the current claim experience~~may contribute to significant claims development gains or ~~underwriting results will continue into~~losses in the future.

A summary of net investment income generated by investments held by our insurance operations ~~follows. Amounts are in millions.~~follows (in millions).


	Third Quarter				First Nine Months				Second Quarter				First Six Months
	2016		2015		2016		2015		2017		2016		2017		2016
Interest income	$	224	$	221	$	668	$	675	$	280	$	214	$	526	$	444
Dividend income		805		824		2,738		2,791		1,003		1,021		1,886		1,933

Net investment income before income taxes and noncontrolling interests		1,029		1,045		3,406		3,466
Investment income before income taxes and noncontrolling interests										1,283		1,235		2,412		2,377
Income taxes and noncontrolling interests		179		205		659		774		318		257		539		480

Net investment income	$	850	$	840	$	2,747	$	2,692	$	965	$	978	$	1,873	$	1,897

Pre-tax investment income in the ~~third~~second quarter and first ~~nine~~six months of ~~2016 declined $16~~2017 increased $48 million ~~(2%~~(4%) and ~~$60~~$35 million ~~(2%~~(1%), respectively, from ~~2015, due primarily to lower dividends from foreign issuers as a result of investment dispositions~~the same periods in ~~2015,~~2016. These increases reflected increased interest income, partly offset by ~~increased dividends from domestic issuers.~~lower dividend income. We continue to hold significant amounts of cash and cash equivalents and U.S. Treasury Bills earning very low yields. While still historically low, the yields were higher in 2017 than in 2016. We believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to such balances. The decrease in dividends in 2017 reflected Dow Chemical Company’s redemption of our $3 billion investment in 8.5% preferred stock in December 2016, partly offset by increased dividend income from investments in other equity securities attributable to increased dividend rates of certain issuers and increased overall investment levels.

Invested assets of our insurance businesses derive from shareholder capital, including reinvested earnings, and from net liabilities under insurance contracts or “float.” The major components of float are unpaid losses, life, annuity and health benefit liabilities, unearned premiums and other liabilities to policyholders less premium and reinsurance receivables, deferred charges assumed under retroactive reinsurance contracts and deferred policy acquisition costs. Float approximated ~~$91~~$107 billion at ~~September~~June 30, ~~2016~~2017 and ~~$88~~$91 billion at December 31, ~~2015.~~2016. The increase in float in 2017 was primarily attributable to the AIG Agreement. Our average cost of float was ~~negative~~approximately 0.4% in the first six months of 2017, as ~~our insurance businesses overall~~we generated an aggregatepre-tax underwriting ~~gains in each period.~~loss of $403 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

A summary of cash and investments held in our insurance businesses ~~follows. Amounts are in millions.~~follows (in millions).


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
Cash and cash equivalents	$	50,242	$	43,762
Cash and cash equivalents and U.S. Treasury Bills					$	60,198	$	48,888
Equity securities		100,277		109,607		134,525		119,780
Fixed maturity securities		23,630		23,621		22,696		22,778
Other investments		15,415		15,998		16,838		14,364

	$	189,564	$	192,988	$	234,257	$	205,810

Fixed maturity ~~investments~~securities as of ~~September~~June 30, ~~2016~~2017 were as ~~follows. Amounts are in millions.~~follows (in millions).


	Amortized cost		Unrealized gains/losses		Carrying value		Amortized cost		Unrealized gains(losses)		Carrying value
U.S. Treasury, U.S. government corporations and agencies	$	4,053	$	16	$	4,069	$	4,444	$	(7)	$	4,437
States, municipalities and political subdivisions		1,180		62		1,242		1,022		52		1,074
Foreign governments		9,319		341		9,660		8,724		196		8,920
Corporate bonds, investment grade		5,491		515		6,006		5,715		441		6,156
Corporate bonds, non-investment grade		1,280		277		1,557		989		219		1,208
Mortgage-backed securities		949		147		1,096		793		108		901

	$	22,272	$	1,358	$	23,630	$	21,687	$	1,009	$	22,696

U.S. government obligations are rated AA+ or Aaa by the major rating agencies and approximately ~~87%~~88% of all state, municipal and political subdivisions, foreign government obligations and mortgage-backed securities were rated AA or ~~higher.~~ higher by the major rating agencies.Non-investment grade securities represent securities ~~that are~~ rated belowBBB- or Baa3. Foreign government securities include obligations issued or unconditionally guaranteed by national or provincial government entities.

Burlington Northern Santa Fe, LLC (“BNSF”) operates one of the largest railroad systems in North America. BNSF operates approximately 32,500 route miles of track in 28 ~~states. BNSF also operates~~states, as well as in three Canadian provinces. BNSF’s major business groups are classified by type of product shipped and include consumer products, coal, industrial products and agricultural ~~products and coal. Earnings~~products. A summary of ~~BNSF are summarized below~~BNSF’s earnings follows (in millions).


	Third Quarter				First Nine Months				Second Quarter				First Six Months
	2016		2015		2016		2015		2017		2016		2017		2016
Revenues	$	5,167	$	5,600	$	14,519	$	16,571	$	5,250	$	4,585	$	10,435	$	9,352


Operating expenses:
Compensation and benefits		1,193		1,220		3,535		3,826		1,242		1,134		2,525		2,342
Fuel		533		670		1,359		2,080		577		431		1,182		826
Purchased services		562		633		1,789		1,909		609		589		1,235		1,227
Depreciation and amortization		534		503		1,584		1,488		592		530		1,165		1,050
Equipment rents, materials and other		462		497		1,379		1,538		437		414		938		917

Total operating expenses		3,284		3,523		9,646		10,841		3,457		3,098		7,045		6,362
Interest expense		250		238		744		683		256		249		508		494

		3,534		3,761		10,390		11,524		3,713		3,347		7,553		6,856

Pre-tax earnings		1,633		1,839		4,129		5,047		1,537		1,238		2,882		2,496
Income taxes		613		683		1,553		1,883		579		466		1,086		940

Net earnings	$	1,020	$	1,156	$	2,576	$	3,164	$	958	$	772	$	1,796	$	1,556

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Consolidated revenues in the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 were ~~approximately $5.2~~$5.3 billion and ~~$14.5~~$10.4 billion, respectively, representing ~~decreases~~increases of ~~$433~~$665 million ~~(7.7%~~(14.5%) and ~~$2.1 billion (12.4%~~$1,083 million (11.6%), respectively, versus the corresponding periods in ~~2015.~~ 2016.Pre-tax earnings in the ~~third~~second quarter and first ~~nine~~six months of ~~2016 declined 11.2%~~2017 increased 24.2% and ~~18.2%~~15.5%, respectively, compared to the same periods in ~~2015. In 2016, our revenues and earnings were negatively impacted by lower volumes versus 2015, particularly in the coal and petroleum products categories.~~2016.

In the first ~~nine~~six months of ~~2016,~~2017, revenues reflected a 4.1% comparative ~~declines~~increase in average revenue per car/unit ~~(6.5%)~~ and a 7.6% increase in ~~volumes (6.6%).~~volume. Ouryear-to-date volume was 5.0 million cars/units compared to 4.7 million in 2016. We currently expect our overall volume growth will moderate in the second half of 2017 compared to the growth experienced in the first six months of 2017. The ~~decrease~~increase in average revenue per car/unit was primarily attributable to ~~lower~~higher fuel surcharge revenue ~~driven by lower fuel prices~~ and business mix ~~changes. The fuel price impact on fuel surcharges generally lags its impact on fuel costs. This timing difference contributed to the decline in earnings in the first quarter of 2016~~changes, as compared to 2015 because the price of fuel declined more significantly in early 2015. The effect of the timing difference has moderated since the first quarter and is not expected to be significant in the fourth quarter.well as increased rates per car/unit.

Freight revenues from consumer products in ~~the third quarter of 2016~~2017 were $1.7 billion ~~a decline of 3.4% from 2015, driven by a 3.6% decline~~ in ~~volume. Revenues for~~the second quarter and $3.4 billion in the first ~~nine~~six months, representing increases of ~~2016 were $4.8 billion, a decline~~8.4% and 8.6%, respectively, compared to 2016. The revenue increases reflected volume increases of ~~2.2% from 2015. Volume for~~5.8% in the second quarter and 5.7% in the first ~~nine~~six months as well as higher average revenue per car/unit. The volume increases were primarily attributable to higher market share, improving economic conditions, and normalizing of ~~2016 was relatively flat, as increased automotive volumes, due to the addition of a new customer, and~~retail inventories, which benefited domestic intermodal, ~~volumes were offset by lower~~ international intermodal ~~volumes attributable to soft economic activity~~ and ~~excess retail inventories.~~automotive volumes.

~~In the third quarter and first nine months of 2016, freight~~Freight revenues from industrial products in 2017 were ~~$1.2~~$1.3 billion in the second quarter and ~~$3.6~~$2.5 billion ~~respectively, which decreased 15.2%~~for the first six months, or increases of 7.4% and ~~15.8%~~5.7%, respectively, from the comparable ~~2015~~2016 periods. The ~~decreases reflected lower volumes (8.0%~~increases were attributable to higher average revenue per car/unit, as well as volume increases of 4.1% in the ~~third~~second quarter and ~~7.5%~~2.3% in the first ~~nine months), primarily~~six months. Volumes in 2017 were higher for minerals, steel and other commodities that support domestic drilling activity as well as higher taconite, partly offset by lower petroleum products ~~reflecting~~volume, due to pipeline displacement of U.S. crude ~~rail~~ traffic, and lower ~~U.S. oil production. This decline was partially offset by increased~~ plastics ~~products~~ volume. For the first nine months of 2016, we also experienced lower demand for taconite and steel products partially offset by increased movements of non-owned rail equipment. With oil production at low levels, along with pipeline displacement of rail, we expect comparative volume declines in petroleum and related products for the remainder of 2016.

Freight revenues ~~in 2016~~ from agricultural products in 2017 increased ~~7.8%~~18.0% in the ~~third~~second quarter to $1.1 billion and ~~decreased 1.8%~~increased 11.4% to ~~$3.1~~$2.2 billion in the first ~~nine~~six months compared to the same periods in ~~2015.~~2016. The ~~increase in~~ revenue growth reflected higher volumes, 14.5% in the ~~third~~second quarter ~~of 2016 was driven by a volume increase of 13.2% compared to 2015. The decrease in~~and 7.8% for the first ~~nine~~six months, ~~of 2016 was primarily attributable to lower average~~as well as higher revenue per ~~car, partly offset by a~~car/unit. The volume ~~increase of 6.7%. In the third quarter and first nine months of 2016 volumes increased~~growth in 2017 was primarily due to higher ~~corn, soybeans and wheat~~grain exports.

Freight revenues ~~in 2016~~ from coal ~~declined 18.5%~~in 2017 increased 39.2% in the ~~third~~second quarter to ~~$1.0 billion~~$912 million and ~~33.0%~~30.5% in the first ~~nine~~six months to ~~$2.4~~$1.9 billion compared to ~~the same periods~~2016. The increase in ~~2015. Coal~~revenues reflected higher volumes, ~~declined 13.0%~~20.7% in the ~~third~~second quarter and ~~26.5%~~19.5%year-to-date, as well as higher average revenue per car/unit. The volume increases in 2017 were due to mild winter weather in the first ~~nine months~~quarter of ~~2016. In recent years, demand for coal by utilities has declined as other fuel sources, particularly natural gas, have increased. Coal volumes in 2015 also benefitted from~~2016 and higher ~~demand in the early part of the year as utility customers restocked coal inventories. Although~~ natural gas prices ~~have risen~~ in the ~~third quarter, we expect declines~~first half of 2017. Together, these factors led to increased utility coal usage in ~~coal volumes for~~2017, which were partly offset by the ~~rest~~effects of ~~2016, driven by coal~~ unit retirements ~~and elevated utility~~of coal ~~inventories.~~generating facilities.

Operating expenses in the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 were ~~$3.3~~$3.5 billion and ~~$9.6~~$7.0 billion, respectively, ~~representing decreases~~increases of ~~$239~~$359 million ~~(6.8%~~(11.6%) and ~~$1.2 billion (11.0%~~$683 million (10.7%), respectively, compared to the same periods in ~~2015.~~2016. Our ratios of operating expenses to revenues ~~in 2016 increased 0.7~~decreased 1.7 percentage points to ~~63.6%~~65.8% in the ~~third~~second quarter and ~~1.0~~0.5 percentage points to ~~66.4%~~67.5% for the first ~~nine~~six months of 2017 versus the corresponding ~~2015~~2016 periods.

Compensation and benefits expenses ~~decreased $27~~increased $108 million ~~(2.2%~~(9.5%) for the ~~third~~second quarter and ~~$291~~$183 million ~~(7.6%~~(7.8%) for the first ~~nine~~six months ~~of 2016 as~~ compared to ~~2015.~~2016. The ~~declines~~increases were primarily due to ~~lower employment levels, as a result of lower freight volumes,~~higher health and ~~productivity improvements, partially offset by inflation.~~welfare costs, wage inflation and volume-related increases. Fuel expenses ~~declined $137~~increased $146 million ~~(20.4%~~(33.9%) infor the ~~third~~second quarter and ~~$721~~$356 million ~~(34.7%~~(43.1%) infor the first ~~nine~~six months ~~of 2016 as~~ compared to ~~2015~~2016, due to ~~lower~~higher average fuel prices and ~~lower volumes. Purchased services declined $71~~increased volumes, partially offset by improved efficiency. Depreciation and amortization expense increased $62 million ~~(11.2%~~(11.7%) infor the ~~third~~second quarter and ~~$120~~$115 million ~~(6.3%~~(11.0%) infor the first ~~nine~~six months ~~of 2016 as~~ compared to ~~2015,~~2016 due to ~~volume-based and other cost reductions. Depreciation expense increased $31 million (6.2%) in the third quarter and $96 million (6.5%) in the first nine months~~a larger base of ~~2016 as compared to 2015, due to increased~~depreciable assets in service reflecting our ongoing capital additions and improvement programs. In the third quarter and first nine months of 2016, equipment rents, materials and other expense declined $35 million (7.0%) and $159 million (10.3%), respectively, compared to the same periods of 2015. These declines resulted from lower freight volumes and productivity improvements in both periods, as well as, lower derailment and other casualty related costs in the nine-month period.

Interest expense in the third quarter and first nine months of 2016 was $250 million and $744 million, respectively, increases of $12 million (5.0%) and $61 million (8.9%), respectively, compared to 2015. BNSF funds its capital expenditures with cash flow from operations and new debt issuances. The increased interest expense in 2016 resulted from higher average outstanding debt.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

We hold ~~an 89.9%~~a 90.2% ownership interest in Berkshire Hathaway Energy Company (“BHE”), which operates ~~an international~~a global energy business. BHE’s domestic regulated utility interests are comprised of PacifiCorp, MidAmerican Energy Company (“MEC”), and NV Energy. In Great Britain, BHE subsidiaries operate two regulated electricity distribution businesses referred to as Northern Powergrid. BHE also owns two domestic regulated interstate natural gas pipeline companies. Other energy businesses include AltaLink, L.P. (“AltaLink”), a regulated electricity transmission-only business in Alberta, Canada and a diversified portfolio of independent power projects. In addition, BHE also operates the second-largest residential real estate brokerage firm and one of the largest residential real estate brokerage franchise networks in the United States.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Utilities and Energy (“Berkshire Hathaway Energy Company”)(Continued)

The rates our regulated businesses charge customers for energy and services are based, in large part, on the costs of business operations, including a return on capital, and are subject to regulatory approval. To the extent these operations are not allowed to include such costs in the approved rates, operating results will be adversely affected. Revenues and earnings of BHE are summarized ~~below. Amounts are in millions.~~below (in millions).


		Third Quarter								First Nine Months									Second Quarter								First Six Months
		Revenues				Earnings				Revenues				Earnings					Revenues				Earnings				Revenues				Earnings
		2016		2015		2016		2015		2016		2015		2016		2015			2017		2016		2017		2016		2017		2016		2017		2016
PacifiCorp		$	1,445	$	1,432	$	365	$	354	$	3,952	$	3,977	$	867	$	799		$	1,256	$	1,243	$	258	$	258	$	2,548	$	2,507	$	523	$	502
MidAmerican Energy Company			806		685		241		163		2,031		2,017		389		310			669		593		90		95		1,377		1,225		152		148
NV Energy			997		1,130		345		340		2,335		2,688		495		529			761		714		141		118		1,355		1,338		192		150
Northern Powergrid			220		264		57		95		749		852		274		352			220		250		64		92		465		529		167		217
Natural gas pipelines			204		198		59		52		709		743		288		277			190		189		43		49		508		505		243		229
Other energy businesses			703		686		204		191		1,677		1,782		336		341			568		466		72		78		1,081		974		113		132
Real estate brokerage			823		749		89		80		2,162		1,959		187		166			959		844		113		95		1,546		1,339		116		98

		$	5,198	$	5,144					$	13,615	$	14,018						$	4,623	$	4,299					$	8,880	$	8,417

Earnings before corporate interest and income taxes (“EBIT”)	Earnings before corporate interest and income taxes (“EBIT”)						1,360		1,275						2,836		2,774	Earnings before corporate interest and income taxes (“EBIT”)						781		785						1,506		1,476
Corporate interest	Corporate interest						114		122						355		376	Corporate interest						111		119						221		241
Income taxes and noncontrolling interests	Income taxes and noncontrolling interests						314		367						626		689	Income taxes and noncontrolling interests						154		184						268		312

Net earnings attributable to Berkshire Hathaway shareholders	Net earnings attributable to Berkshire Hathaway shareholders					$	932	$	786					$	1,855	$	1,709	Net earnings attributable to Berkshire Hathaway shareholders					$	516	$	482					$	1,017	$	923

PacifiCorp operates a regulated electric utility in portions of several Western states, including Utah, Oregon and Wyoming. ~~PacifiCorp’s revenues~~Revenues in the ~~third~~second quarter and first ~~nine~~six months of ~~2016 were $1.45 billion~~2017 increased $13 million (1%) and ~~$3.95 billion,~~$41 million (2%), respectively, compared with 2016. In the second quarter and ~~were relatively~~first six months of 2017, wholesale and other revenues increased due to higher volumes and average rates. In the second quarter of 2017, retail revenues declined slightly and for the first six months increased $14 million, due to higher volumes, partly offset by lower average rates.

EBIT in the second quarter of 2017 was unchanged from ~~2015. Revenues~~2016, as a slight increase in ~~2016 reflected increased retail revenues~~gross margins and lower ~~wholesale revenues.~~operations and maintenance expenses were substantially offset by increased depreciation and amortization expense. EBIT increased $21 million (4%) in the first six months of 2017, as compared to 2016. The ~~year-to-date~~comparative increase in ~~retail revenues~~EBIT was primarily due to ~~higher retail rates as average customer loads were relatively unchanged. The declines~~an increase in wholesale revenues were attributable to lower volumes and average prices. EBIT in the third quarter and first nine months of 2016 increased $11 million (3.1%) and $68 million (8.5%), respectively, from the same periods of 2015. The increases were primarily due to increased gross margins ~~as energy costs declined due to~~($18 million) and lower ~~fuel prices~~operations and ~~changes in fuel mix.~~maintenance expenses ($22 million), partially offset by increased depreciation, amortization and property tax expenses ($18 million).

MEC operates a regulated electric and natural gas utility primarily in Iowa and Illinois. Revenues ~~increased $121 million (17.7%)~~ in the ~~third~~second quarter of ~~2016~~2017 increased $76 million (13%) compared to ~~2015, while revenues in the first nine months were comparatively flat versus 2015.~~2016. The ~~revenue~~ increase ~~in the third quarter~~ was primarily due to increases in electric operating revenues ($56 million), due principally to higher ~~retail~~wholesale volumes and ~~wholesale~~rates, and natural gas revenues ($18 million) due to higher averageper-unit cost of gas sold (offset in cost of sales). EBIT in the second quarter of 2017 decreased $5 million (5%) compared to 2016. Although revenues and gross margin dollars increased in the second quarter, average gross margin percentages declined due to higher coal-fueled generation and purchased power costs. In addition, in the second quarter of 2017, operating expenses increased $42 million compared to 2016, which included an increase in depreciation and amortization expense of $31 million attributable to higher regulatory provisions and increased assets in service.

Revenues in the first six months of 2017 increased $152 million (12%) compared to 2016. The increase reflected increases in electric operating revenues ($90 million) and natural gas operating revenues ($54 million). The increase in electric revenues was attributable to higher wholesale and other revenue ($~~107~~67 million), substantially due to higher wholesale volumes and average rates, and increased retail revenues ($23 million). The increase in retail ~~electric~~ revenues ~~resulted primarily~~reflected increased recoveries through bill riders (which are substantially offset by increases in costs and expenses) and from ~~a 3.6% increase~~non-weather usage and rate factors, partially offset by the unfavorable impact of temperatures in ~~customer load and higher electric rates, and the increase in wholesale revenues was due to increased wholesale prices and volumes and transmission revenue. Revenues~~2017. EBIT in the first ~~nine~~six months of ~~2016 included~~2017 increased electric revenues ($100 million), which were largely offset by lower natural gas revenues ($69 million) and other revenues. The decline in natural gas revenues was primarily due to lower average per-unit cost of gas sold ($61 million) which is offset in cost of sales, and a 6.3% decline in retail sales volumes, primarily from warmer winter temperatures in 2016. EBIT increased $78$4 million ~~(47.9%~~(3%) ~~in the third quarter and $79 million (25.5%) in the first nine months of 2016 as~~ compared to ~~2015.~~2016. The increase in EBIT ~~was primarily due to increased gross margins from electric~~reflected the increases in revenues ~~partially~~substantially offset by higher coal-fueled generation and purchased power costs, higher per-unit cost of natural gas sold and increased depreciation, maintenance and ~~amortization from additional assets placed in service and higher interest~~other operating expenses. ~~In addition, EBIT in the first nine months of 2015 included a gain of $13 million from the sale of a generating facility lease.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Utilities and Energy (“Berkshire Hathaway Energy Company”)(Continued)

NV Energy operates regulated electric and natural gas utilities in Nevada. Revenues increased $47 million (7%) in the ~~third~~second quarter and $17 million (1%) in the first ~~nine~~six months of ~~2016 were approximately $1.0 billion and $2.3 billion, respectively, decreases of $133 million (11.8%) and $353 million (13.1%), respectively, versus~~2017 compared to the same periods in ~~2015. The~~2016. These increases were due primarily to increases in retail electric operating revenues, which reflected a combination of increased rates from pass-through cost adjustments and higher volumes, partly offset by lower revenues from energy efficiency programs, which are offset by lower operating expenses. In 2017, NV Energy also experienced declines ~~were primarily attributable~~in operating revenues from commercial and industrial customers electing to ~~lower electric retail rates resulting~~purchase power from ~~lower energy costs. Electric retail customer load~~alternative sources and, thus, becoming distribution service only customers. Natural gas operating revenue decreased in the first ~~nine~~six months of ~~2016~~2017 primarily due to lower rates, partially offset by higher customer usage.

EBIT increased ~~1.4% compared to 2015. EBIT were relatively unchanged~~$23 million (19%) in the ~~third~~second quarter and ~~fell $34~~$42 million ~~(6.4%~~(28%) in the first ~~nine~~six months of ~~2016~~2017 compared to ~~2015. In~~the corresponding 2016 ~~the negative impact of the revenue declines~~periods. These increases were ~~substantially offset by the declines in energy costs. However, operating expenses~~primarily due to increased ~~$6 million (2%) in the third quarter~~gross margins and $48 million (7%) in the first nine months compared to 2015. The year-to-date increase resulted primarily from higher depreciation and amortization and property and other taxes. In addition, operating expenses in the first nine months of 2015 included non-recurring benefits from reductions in certain accrued liabilities.lower interest expense.

Revenues in the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 declined ~~$44~~$30 million ~~(16.7%~~(12%) ~~to $220~~and $64 million ~~and $103 million (12.1%~~(12%) ~~to $749 million, respectively, as~~ compared to ~~2015. The unfavorable impact from a stronger U.S. Dollar reduced revenues by $40 million in the third quarter and $72 million in the first nine months. In the first nine months of~~ 2016, revenues also declined, due to lower tariff rates from a new price control period that became effective April 1, 2015. EBIT in the third quarter and first nine months of 2016 declined $38 million (40.0%) to $57 million and $78 million (22.2%) to $274 million, respectively, as compared to 2015. The declines were primarily due to the ~~impact~~unfavorable currency translation effect of ~~lower tariff rates and the~~a comparatively stronger U.S. Dollar in 2017 and lower distribution revenue, partially offset by higher smart metering revenue. Changes in the average foreign currency exchange rates accounted for $27 million and $65 million of the comparative revenue declines in the second quarter and first six months of 2017, respectively. Distribution revenues in the first six months of 2017 declined primarily due to the recovery in the first quarter of 2016 of the December 2013 customer rebate ($11 million), unfavorable movements in regulatory provisions and lower distribution volumes ($12 million), partially offset by higher tariff rates ($15 million). EBIT in the first six months of 2017 declined $50 million (23%) compared to 2016, primarily due to foreign currency translation effects, as well as ~~increases in~~higher depreciation expense from additional assets placedin-serviceand ~~other operating~~increased pension expenses.

Revenues in the ~~third~~second quarter and first six months of ~~2016 increased 3.0% and for~~2017 were relatively unchanged from 2016. In the first ~~nine~~six months ~~declined 4.6% as~~of 2017, higher gas sales, primarily from system balancing activities (largely offset in cost of sales), and higher transportation revenues at Northern Natural Gas were offset by lower transportation revenues at Kern River. EBIT in the first six months of 2017 increased $14 million (6%) compared to ~~2015.~~2016. The ~~revenue~~ increase ~~in the third quarter~~ was primarily ~~attributable~~due to ~~transportation revenues from expansion projects. For the first nine months of 2016, the decline was due~~a reduction in expenses and regulatory liabilities related to the impact of ~~lower gas sales from balancing activities and lower transportation revenues from lower volumes and rates, in part due to comparatively milder temperatures~~an alternative rate structure approved by Kern River’s regulators in the first ~~quarter. EBIT~~quarter of 2017 and from the changes in 2016 increased $7 million (13.5%) in the third quarter and $11 million (4.0%) in the first nine months versus 2015. These increases reflected lower interest expense in 2016, as a result of lower average debt balances, partly offset by increased depreciation expense.transportation revenues.

Revenues in the ~~third~~second quarter and first six months of ~~2016~~2017 increased ~~$17~~$102 million ~~(2.5%~~(22%) and ~~for the first nine months declined $105~~$107 million ~~(5.9%~~(11%), respectively, compared to the ~~corresponding 2015 periods. The increase~~same periods in ~~third quarter revenues was~~2016. These increases were primarily ~~attributable~~due to ~~increased revenues from AltaLink as a result of increased assets in service. The declines in comparative revenues in~~ the ~~first nine months were principally attributable to lower revenues from AltaLink and from our unregulated retail services business. AltaLink’s year-to-date revenue decline reflected the impact~~effects of a ~~regulatory~~ decision in ~~the second quarter that resulted in one-time net reductions in revenue,~~May 2016 by AltaLink’s regulator, which ~~more than offset increased revenues from additional assets placed in service. The regulatory decision~~ changed the timing of whenconstruction-in-progress expenditures included in rate base are billable to customers and earned in ~~revenues, but had no impact on~~revenues. The decision resulted in aone-time net ~~earnings as~~reduction in revenue in the ~~one-time revenue~~second quarter of 2016, with an offsetting reduction ~~was offset by one-time reductions~~ in expenses.

Otherwise, operating revenues from renewable energy increased 18% in the first six months of 2017 due to increased assets in service and increased solar generation, while revenues from the unregulated retail services business declined 9%. EBIT in the ~~third~~second quarter and first six months of ~~2016 increased $13 million (6.8%) over 2015, while EBIT in the first nine months~~2017 declined ~~$5 million (1.5%)~~8% and 14%, respectively, compared to ~~2015.~~2016. The ~~increase in third quarter EBIT was primarily due to~~declines reflected higher other operating costs, partly offset by increased earnings from ~~our~~ renewable ~~energy and transmission businesses, while the decline in the first nine months reflected lower solar generation primarily from transformer related forced outages.~~energy.

Revenues in the ~~third quarter and~~ first ~~nine~~six months of ~~2016~~2017 increased ~~9.9%~~$207 million (15%) compared to ~~$823~~2016. The increase was primarily due to recent business acquisitions, and modest increases in closed sales units and average transaction prices for existing businesses. EBIT in the first six months of 2017 increased $18 million ~~and 10.4% to $2.16 billion, respectively,~~ as compared to 2015. The increases were primarily attributable to increased closed brokerage transactions (primarily as a result of business acquisitions) and from modest increases in average home prices, as well as higher mortgage revenues. EBIT in the third quarter and first nine months of 2016 increased $9 million (11.3%) and $21 million (12.7%), respectively, compared to 2015, primarily reflecting the increases in mortgage revenues.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

~~Utilities and Energy (“Berkshire Hathaway Energy Company”)~~~~(Continued)~~

Corporate interest includes interest on unsecured debt issued by BHE and borrowings from certain Berkshire insurance subsidiaries. ~~The declines in corporate interest in 2016 were primarily due to lower average borrowings from Berkshire insurance subsidiaries.~~ BHE’s ~~effective income tax rate for the first nine months was approximately 15.9% in 2016 and 19.8% in 2015. BHE’s~~consolidated effective income tax rates ~~regularly reflect significant~~for the first six months of 2017 and 2016 were approximately 11% and 16%, respectively. The effective tax rate decreased primarily due to an increase in production tax credits ~~from wind-powered electricity generation placed in service. In addition, pre-tax earnings of Northern Powergrid~~recognized and ~~AltaLink are taxed at~~ lower ~~statutory rates~~consolidated deferred state income tax expenses due to changes in the ~~U.K.~~tax status of certain subsidiaries.

Item 2. Management’s Discussion and ~~Canada, respectively, compared to the statutory tax rate in the U.S.~~Analysis of Financial Condition and Results of Operations(Continued)

A summary of revenues and earnings of our manufacturing, service and retailing businesses ~~follows. Amounts are in millions.~~follows (in millions).

Our manufacturing group includes a variety of businesses that produce industrial, building and consumer products. Industrial products businesses include specialty chemicals (The Lubrizol ~~Corporation)~~Corporation (“Lubrizol”)), metal cutting tools/systems (IMC International Metalworking ~~Companies)~~Companies (“IMC”)), equipment and systems for the livestock and agricultural industries (CTB ~~International)~~International (“CTB”)), and a variety of industrial products for diverse markets (Marmon, Scott Fetzer and ~~Scott Fetzer)~~LiquidPower Specialty Products (“LSPI”)). Beginning on January 29, 2016, our industrial products group also includes Precision Castparts Corp. (“PCC”), a leading manufacturer of complex metal products for aerospace, power and general industrial markets.

Our building products businesses include flooring (Shaw), insulation, roofing and engineered products (Johns Manville), bricks and masonry products (Acme Building Brands), paint and coatings (Benjamin Moore), and residential and commercial construction and engineering products and systems (MiTek). Our consumer products businesses include leisure vehicles (Forest River), ~~six~~several apparel and footwear operations ~~(led by~~(including Fruit of the Loom, ~~which includes Russell athletic apparel~~Garan, H.H. Brown Shoe Group and ~~Vanity Fair Brands women’s intimate apparel)~~Brooks Sports), ~~custom picture framing products (Larson Juhl)~~ and ~~jewelry products (Richline). Beginning~~beginning on February 29, 2016, ~~our consumer products group includes~~ the Duracell Company (“Duracell”), a leading manufacturer of high performance alkaline batteries. This group also includes custom picture framing products (Larson Juhl) and jewelry products (Richline). A summary of revenues andpre-tax earnings of our manufacturing operations ~~follows. Amounts are in millions.~~follows (in millions).

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

Aggregate revenues ~~in 2016 were approximately $12.1 billion~~from manufacturing increased $537 million (4%) in the ~~third~~second quarter and ~~$34.8~~$2.1 billion (9%) in the first nine months, representing increases of approximately $2.9 billion (31.6%) and $7.3 billion (26.4%), respectively, from the corresponding 2015 periods. Pre-tax earnings were approximately $2.0 billion in the third quarter and $5.2 billion in the first ninesix months of ~~2016, representing increases of $722 million (57.3%) and $1.3 billion (33.5%), respectively,~~2017 compared to the same periods in ~~2015. Excluding~~2016.Pre-tax earnings in the second quarter and first six months of 2017 were $1.9 billion and $3.4 billion, respectively, representing increases of $252 million (15%) and $257 million (8%), respectively, over earnings in the corresponding 2016 periods. In 2016, operating results of our industrial products and consumer products businesses included the results of PCC and Duracell ~~aggregate pre-tax~~from their respective acquisition dates.Pre-tax earnings ~~increased 2.9% in the third quarter and were relatively unchanged~~ in the first ~~nine months.~~six months of 2017 also includedpre-tax losses of $193 million in connection with the disposition of an underperformingbolt-on business acquired by Lubrizol in 2014.

Revenues in the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 increased ~~approximately $2.2 billion (52.1%~~$132 million (2%) and ~~$5.7 billion (44.0%), respectively, versus the same periods in 2015. These increases were due to the inclusion of PCC, partially offset by revenue declines of $210~~$946 million (5.0%) in the third quarter and $832 million (6.4%) in the first nine months across our other businesses. In 2016, sales volumes of our other businesses were lower compared to 2015, reflecting sluggish demand for most products, and particularly for products sold to businesses in the oil and gas and heavy equipment industries. In addition, lower costs of oil-based raw materials and metals and increased competitive pressures continued to lower average selling prices.

Pre-tax earnings in 2016 increased $594 million (78.9%) in the third quarter and $1,147 million (48.1%) in the first nine months as compared to 2015. The increases in pre-tax earnings reflected the inclusion of PCC, partially offset by comparative declines in earnings (7.1% for the third quarter and 6.3% for the first nine months) from our other businesses, primarily IMC International, Lubrizol and several of Marmon’s businesses. Generally, these businesses were negatively affected by a combination of weaker customer demand and price and mix changes and increased restructuring costs, partly offset by the impacts of cost containment initiatives and lower average material prices. We expect the prevailing market conditions to continue during the remainder of 2016 and we may take additional cost containment actions in response to further slowdowns in customer demand.

Revenues in the third quarter and first nine months of 2016 increased $32 million (1.1%) and $303 million (3.9%), respectively, compared to the same periods in 2015. In the third quarter, volume-driven revenue increases achieved by MiTek and Johns Manville were partially offset by revenue declines at Benjamin Moore and Shaw. In the first nine months, the revenue increase reflected increased unit sales across most of our product categories, and was partly offset by lower average sales prices and changes in product mix.

Pre-tax earnings in 2016 increased $16 million (4.6%) in the third quarter and decreased $8 million (0.9%) in the first nine months as compared to the corresponding periods in 2015. In the first nine months, the favorable impact from increased sales volume and lower manufacturing costs attributable to deflation in certain commodity unit costs was essentially offset by increased charges related to asset impairments, pension settlements and environmental claims.

~~Revenues in the third quarter and first nine months of 2016 were approximately $2.8 billion and $8.1 billion, respectively, increases of $677 million (31.3%) and approximately $1.3 billion (18.9%~~(8%), respectively, compared to the corresponding ~~2015~~2016 periods. In the second quarter, revenues of the IMC group increased 9%, PCC and Marmon each increased 2% and LSPI increased 36%, while revenues of Lubrizol declined 2%. The increases ~~reflected the inclusion of Duracell~~from IMC and ~~increases in Forest River’s revenues of 19% in the third quarter and 12% in the first nine months, which~~LSPI were primarily ~~attributable~~due to increased unit sales. ~~Apparel~~PCC’s revenues ~~in the third quarter~~ increased ~~$18 million (1.6%) and~~17% in the first ~~nine~~six months ~~declined $56 million (1.8%)~~of 2017 compared to ~~2015. The~~ the five-month post-acquisition period in 2016. Comparatively higher unit sales droveyear-to-date ~~decline reflected~~ revenue increases of LSPI (17%) and IMC (8%), while increases from business acquisitions, partly offset by lower ~~footwear sales~~average selling prices and ~~the impact of the disposition of a historically unprofitable operation within Fruit of the Loom in 2015.~~mix changes accounted for CTB’s 5%year-to-date revenue

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

increase. Marmon’s revenues increased 3% in the first six months of 2017 versus 2016, reflecting a mixture of increases from business acquisitions and higher average metal prices, partly offset by lower demand at some of its business units, particularly those that provide products for the retail, industrial equipment, agricultural, wire products and grocery store markets. On a comparable fullyear-to-date basis, PCC’s revenues increased approximately 3% compared to 2016. In 2017, PCC experienced revenue increases from structural castings, airfoils and industrial gas turbine products and from new business acquisitions, which were partly offset by lower revenues from airframe products.

Pre-tax earnings in the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 increased ~~$112~~$134 million ~~(70.0%~~(12%) and ~~$154~~$74 million ~~(27.8%~~(3%), respectively, compared to the ~~same periods~~second quarter and first six months of 2016. In the second quarter and first six months of 2017, PCC, IMC and LSPI generated earnings increases, while earnings from Lubrizol and CTB were lower. Lubrizol recognizedpre-tax losses of $193 million in ~~2015.~~the first six months of 2017, substantially all of which was in the first quarter, related to the disposition of an underperformingbolt-on business and related intangible asset impairment and restructuring charges. Over the first six months of 2017, Lubrizol, CTB, as well as certain other businesses, experienced selling price pressures and higher manufacturing costs, driven by increased prices for petroleum-based materials and certain metals, which contributed to comparativepre-tax earnings declines. We continue to implement cost containment and other initiatives intended to improve productivity at several of our businesses.

Revenues in the second quarter and first six months of 2017 increased $278 million (10%) and $551 million (10%), respectively, compared to 2016. The increases were primarily due to the effect ofbolt-on business acquisitions (Shaw and MiTek) and sales volume increases (MiTek and Johns Manville), partly offset by lower average sales prices and changes in product mix.

Pre-tax earnings in the second quarter and first six months of 2017 increased $96 million (31%) and $103 million (19%), respectively, compared to 2016. These increases were attributable to asset impairment, pension settlement and environmental claim charges recorded in the second quarter of 2016 by Shaw and Benjamin Moore (aggregating about $90 million), and earnings from recentbolt-on acquisitions, partly offset by comparative declines in the average gross margin rates. Over the first six months of 2017, a combination of lower average selling prices and higher average raw materials costs negatively affected the operating results of our building products businesses.

Revenues increased $127 million (4%) in the second quarter and $583 million (11%) in the first six months of 2017 compared to the corresponding 2016 periods. The second quarter revenue increase included a 12% comparative increase at Forest River, attributable to an 11% increase in unit sales. The increase in revenues for the first six months reflected a 74% increase in revenues of Duracell, which we acquired February 29, 2016, and a 9% increase in Forest River’s revenues, primarily due to a 10% increase in unit sales. Apparel revenues in the first six months of 2017 declined slightly (1%) compared to 2016.

Pre-tax earnings in the second quarter and first six months of 2017 increased $22 million (9%) and $80 million (18%), respectively, compared to 2016. The increases in ~~third~~earnings in the second quarter ~~earnings reflected the impact~~and first six months of ~~the Duracell acquisition as well as~~2017 were primarily due to increased earnings from Duracell and Forest River, ~~and certain of our~~partly offset by lower apparel ~~businesses. Duracell contributed pre-tax earnings of $39 million~~earnings. Duracell’s comparative results in the ~~third quarter of~~2017 periods reflected significant decreases in transition and integration costs arising from the acquisition in 2016 and ~~$5 million from its acquisition date,~~otherwise improved operating results. The declines in apparel earnings were primarily attributable to Fruit of the Loom, reflecting the impact of ~~transition and integration costs. Forest River generated pre-tax earnings increases of 34% in the third quarter and 24% in the first nine months, primarily due to increased unit sales~~lower gross margins and higher gross margin rates. Earnings of our apparel businesses increased 62% in the third quarter and 29% in the first nine months. The comparative increases were primarily attributable to lower restructuring costs in 2016 and a loss on the disposition of the Fruit of the Loom unprofitable operation in 2015, partly offset by lower earnings in 2016 from our footwear businesses.operating expenses.

Our service and retailing businesses are comprised of a large group of independently managed businesses engaged in a variety of activities. A summary of revenues andpre-tax earnings of these operations ~~follows. Amounts are in millions.~~follows (in millions).


	Third Quarter								First Nine Months								Second Quarter								First Six Months
	Revenues				Pre-tax earnings				Revenues				Pre-tax earnings				Revenues				Pre-tax earnings				Revenues				Pre-tax earnings
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017		2016		2017		2016
Service	$	2,619	$	2,469	$	305	$	287	$	7,557	$	7,579	$	826	$	919	$	2,792	$	2,577	$	351	$	296	$	5,409	$	4,938	$	611	$	521
Retailing		3,712		3,682		144		91		11,050		9,387		404		341		3,758		3,808		204		161		7,234		7,338		337		260
McLane Company		12,271		12,264		106		106		36,121		36,200		371		384		12,581		12,049		69		129		24,682		23,850		157		265

	$	18,602	$	18,415	$	555	$	484	$	54,728	$	53,166	$	1,601	$	1,644	$	19,131	$	18,434	$	624	$	586	$	37,325	$	36,126	$	1,105	$	1,046

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Our service businesses offer fractional ownership programs for general aviation aircraft (NetJets) and high technology training to operators of aircraft (FlightSafety). We also distribute electronic components (TTI) and ~~provide~~service a network of quick service restaurant franchises (Dairy Queen). Service businesses also include the electronic distribution ~~services~~ of corporate news, multimedia and regulatory filings (Business Wire)~~. We are a franchisor~~, publication of ~~quick service restaurants (Dairy Queen), publish~~ newspapers and other publications (Buffalo News and the BH Media Group) and ~~operate~~operation of a television station in Miami, Florida (WPLG). We also offer third party logistics services that primarily serve the petroleum and chemical industries (Charter Brokerage).

Revenues in the ~~third~~second quarter and first six months of ~~2016~~2017 increased ~~$150~~$215 million ~~(6.1%~~(8%) and 471 million (10%), respectively, as compared to 2015, while revenues for the first nine months of 2016 were relatively unchanged from 2015. NetJets’ comparative revenues increased 3.9% in the third quarter and decreased 6.3% for the first nine months.2016. The increase in NetJets’ third quarter revenues reflected a 2% increase in operating revenues and increased gains from aircraft dispositions, while the decline in revenues for the first nine months was primarily due to lower aircraft sales. TTI’s revenue increases ~~in 2016 were 9.1% in the third quarter and 5.5% for the first nine months and~~ were primarily due to ~~increased~~increases from NetJets and TTI. The revenue increases at NetJets reflected increases in aircraft sales and lease revenues and a 4% year-to-date increase in revenue flight hours. The increases in TTI’s revenues were primarily due to unit volume increases in ~~Europe and through the Internet.~~most of its markets.

Pre-tax ~~earnings increased $18 million (6.3%) in the third quarter and decreased $93 million (10.1%) in the first nine months of 2016 as compared to corresponding periods in 2015. Pre-tax~~ earnings in the ~~third~~second quarter ~~included~~and first six months of 2017 increased $55 million (19%) and $90 million (17%), respectively, compared to 2016. The increases in earnings were primarily attributable to increased earnings ~~from~~of NetJets and TTI partly offset by lower earnings from ~~several of our other service~~media and logistics services businesses. The year-to-date decline in earnings was primarily due to lower earnings from NetJets, FlightSafety and our newspaper businesses. The decline in NetJets’ earnings for the first nine months was primarily due to increased depreciation expense and lower aircraft sales margins. TTI’s earnings were relatively flat in 2016 as changes in geographic sales mix and price competition produced lower gross margin rates, offsetting the aforementioned revenue increases.

Our retailing businesses include four distinct home furnishings retailing businesses (Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan’s), which sell furniture, appliances, flooring and electronics. Our ~~retailing businesses~~retailers also include Berkshire Hathaway Automotive (“BHA”) ~~which was acquired in the first quarter of 2015.~~. BHA ~~currently~~ includes 83 auto ~~dealerships. BHA sells~~dealerships, which sell new andpre-owned automobiles and ~~offers~~offer repair and other related services and ~~products, and~~products. BHA also includes two related insurance businesses, two auto auctions and a distributor of automotive fluid maintenance products.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

Our other retailing businesses include three jewelry retailing businesses (Borsheims, Helzberg and Ben Bridge), See’s Candies (confectionary products), Pampered Chef (high quality kitchen tools), Oriental Trading Company (party supplies, school supplies and toys and novelties) and Detlev Louis Motorrad (“Louis”), a Germany-based retailer of motorcycle ~~accessories based in Germany which was acquired in the second quarter of 2015.~~accessories.

Revenues of our retailing businesses in the ~~third~~second quarter and first ~~nine~~six months of ~~2016 increased approximately $30 million (0.8%~~2017 decreased (1%) ~~and $1.7 billion (17.7%), respectively,~~ as compared to the same periods in ~~2015. The increase~~2016. These decreases were primarily due to lower revenues at BHA as a result of lower vehicle units sold, partly offset by increases in ~~year-to-date~~ revenues ~~reflected the impact of the BHA and Louis acquisitions, which accounted for approximately $1.5 billion of the comparative increase. Revenues~~ of our home furnishings retailers, Pampered Chef and See’s Candies.

Pre-tax earnings in the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 from retailing increased ~~$11~~$43 million ~~(1.3%~~(27%) and ~~$180~~$77 million ~~(8.5%~~(30%)~~, respectively,~~ over ~~2015,~~2016. These increases reflected higher earnings from BHA, our home furnishings retailers, Pampered Chef and See’s Candies. The earnings increases of BHA were primarily due to ~~new stores opened in 2015~~increased earnings from service, finance and insurance activities, partly offset by ~~Nebraska Furniture Mart and Jordan’s. Pre-tax~~lower auto sales margins. The earnings ~~in 2016~~increases from ~~the retail group increased $53 million (58.2%)~~our home furnishings retailers were attributable to overall increases in the ~~third quarter~~gross margin rates and ~~$63 million (18.5%) in the first nine months.~~relatively lower operating expenses. The increases from Pampered Chef and See’s Candies were primarily attributable to ~~BHA, Louis~~year-to-date revenue increases of 13% and ~~our home furnishings businesses.~~4%, respectively, and cost management efforts.

McLane operates a wholesale distribution business that provides grocery andnon-food consumer products to retailers and convenience stores (“grocery”) and to restaurants (“foodservice”). McLane also operates businesses that are wholesale distributors of distilled spirits, wine and beer (“beverage”). The grocery and foodservice ~~businesses~~units are marked by high sales volumes and very low profit margins and have several significant customers, including ~~Wal-Mart, 7-Eleven~~Wal-Mart,7-Eleven and Yum! Brands. A curtailment of purchasing by any of its significant customers could have an adverse impact on McLane’s periodic revenues and earnings.

Revenues for the ~~third~~second quarter and first ~~nine~~six months of 2017 were $12.6 billion and $24.7 billion, respectively, increases of 4.4% and 3.5% over the second quarter and first six months of 2016, ~~were $12.3 billion and $36.1 billion, respectively, and were relatively unchanged as compared with~~respectively. The increase in revenues for the ~~corresponding periods in 2015. Year-to-date revenues in 2016 reflected a comparative decline in grocery sales~~first six months of ~~2%, attributable to lower unit volume, partly offset by price and mix changes. Year-to-date foodservice revenues increased 3%,~~2017 was primarily due to ~~an overall~~a 4.6% increase in ~~unit volume. Earnings~~grocery sales.Pre-tax earnings in the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 were ~~$106~~$69 million and ~~$371~~$157 million, respectively, ~~unchanged from the third quarter~~decreases of ~~2015~~$60 million (47%) and ~~a decrease of $13~~$108 million ~~(3%~~(41%) compared to ~~the first nine months~~corresponding 2016 periods. The earnings declines reflected a 59% decline inyear-to-date earnings of ~~2015. Pre-tax earnings~~our grocery operations. In 2017, significant pricing pressures and an increasingly competitive business environment negatively affected our operating results, particularly with respect to our grocery business. These conditions, together with increased fuel, trucking, insurance and depreciation expenses contributed to a 47 basis point decline in ~~the first nine months of 2015 included a gain of $19 million from the disposition of a subsidiary. Excluding this gain, the~~our overall operating margin (ratio ofpre-tax earnings to revenues) infor the first ~~nine~~six months of ~~2016 was 1.03%, compared to 1.01% in 2015. The grocery~~2017.

Item 2. Management’s Discussion and ~~foodservice business has been~~Analysis of Financial Condition and ~~is expected to continue to be highly competitive.~~Results of Operations(Continued)

Our finance and financial products businesses include manufactured housing and finance (Clayton Homes), transportation equipment manufacturing and leasing businesses (UTLX and XTRA, and together, “transportation equipment leasing”), as well as other leasing and financing activities. A summary of ~~revenues and~~ earnings from our finance and financial products businesses ~~follows. Amounts are in millions.~~follows (in millions).

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

Clayton Homes’ revenues in the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 increased ~~$173~~$134 million ~~(19%~~(13%) and ~~$420~~$315 million (16%), respectively, compared to ~~2015. The~~the second quarter and first six months of 2016. These increases ~~reflected~~were primarily due to higher home sales, attributable a ~~27%~~14%year-to-date increase in ~~year-to-date revenues from~~unit sales and higher average prices, which were primarily due to sales mix changes. In 2017, home sales ~~due primarily~~included a higher mix of site built homes, which have a higher land content and therefore unit prices tend to ~~a 22% increase~~be higher. Site built gross sales margin rates, however, are typically lower than manufactured homes.Pre-tax earnings increased $18 million (10%) in ~~units sold~~the second quarter and ~~changes in mix. Pre-tax earnings for the third quarter decreased 13% and~~$24 million (7%) in the first ~~nine~~six months of ~~2016 were flat as~~2017 compared to ~~earnings~~the corresponding 2016 periods. Earnings in the ~~corresponding 2015 periods. Clayton’s~~first six months of 2017 included a gain of $11 million from a legal settlement. The earnings increases in ~~2016 were negatively impacted~~2017 also reflected increased earnings from manufacturing and retailing activities, comparatively lower servicing asset impairment charges and increased earnings from insurance services, partly offset by increased ~~losses from insurance claims, increased impairment charges on servicing assets~~employee healthcare, technology, marketing and lower gross sales margins, which partially offset the benefit from the significant increases in unit sales. As of September 30, 2016, approximately 94% of the installment loan portfolio was current in terms of payment status.legal expenses.

Transportation equipment leasing revenues in the ~~third~~second quarter and first ~~nine~~six months of ~~2016 increased $22~~2017 decreased $19 million ~~(3.5%~~(3%) and ~~$160~~$78 million ~~(8.7%~~(6%), respectively, compared to ~~2015.~~2016. The ~~increases derived~~declines were primarily ~~from the acquisition of GE’s~~due to comparative declines in leasing revenues, attributable to lower railcar ~~services~~and trailer fleet ~~and railcar repair services business in the last half of 2015 and an increase in core fleet size, offset in part by lower~~ utilization rates, lower railcar rental renewal rates, and lower volume for crane services, partly offset by increases in repair revenues and lease termination fees. In the first six months of 2017, we also experienced lower tank car sales to third parties, although demand ~~in North America and reduced volumes in other products and services primarily related to oil and gas markets.~~increased during the second quarter.

Pre-tax earnings in ~~2016 were unchanged in~~ the ~~third~~second quarter and ~~increased $76~~first six months of 2017 declined $24 million ~~(11.6%~~(10%) ~~in the first nine months~~and $66 million (13%), respectively, compared to ~~2015. The year-to-date increase was primarily attributable to~~2016. These decreases reflected the aforementioned revenue ~~growth~~declines and ~~lower depreciation rates for certain railcars, partially offset by~~ higher railcar repair ~~costs~~ and storage costs. In 2017, interest expense ~~on new~~also increased due to increased borrowings from a Berkshire financing ~~subsidiary.~~subsidiary, partly offset by lower interest expense on third party borrowings. Significant components of our operating costs, such as depreciation expense, do not vary proportionately to revenue changes. Therefore, changes in revenues can disproportionately impact earnings.

~~Other~~Earnings from other finance activities include CORT furniture leasing, our share of the earnings of a commercial mortgage servicing business (“Berkadia”) in which we own a 50% joint venture interest, and interest and dividends from a portfolio of investments. InPre-tax earnings in the first ~~nine~~six months of ~~2016, other earnings increased $23~~2017 declined $45 million compared to ~~2015,~~2016, reflecting ~~increased earnings~~lower interest and dividend income from ~~investment securities~~investments and ~~CORT, partly offset by~~ lower earnings from ~~Berkadia.~~CORT. Other earnings also includes income from interest rate spreads charged on borrowings by a Berkshire financing subsidiary that are used to finance loans and assets held for lease. ~~Corresponding~~The corresponding expenses are included in ~~Clayton Homes’~~the results of our manufactured housing and ~~UTLX’s results. Interest~~finance and transportation equipment business groups. Pre-tax interest rate spreads charged to these businesses were ~~$55~~$39 million in the first ~~nine~~six months of ~~2016~~2017 and ~~$47~~$35 million in ~~2015.~~2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

A summary of investment and derivative gains and losses ~~follows. Amounts are in millions.~~follows (in millions).


	Third Quarter					First Nine Months				Second Quarter				First Six Months
	2016		2015			2016		2015		2017		2016		2017		2016
Investment gains/losses	$	3,150	$	8,266		$	5,643	$	8,725	$	290	$	643	$	605	$	2,493
Derivative gains/losses		458		(764	)		(332)		380		(65)		20		395		(790)

Gains/losses before income taxes and noncontrolling interests		3,608		7,502			5,311		9,105		225		663		1,000		1,703
Income taxes and noncontrolling interests		1,261		2,625			718		3,185		82		269		353		(543)

Net gains/losses	$	2,347	$	4,877		$	4,593	$	5,920	$	143	$	394	$	647	$	2,246

Investment gains/losses arise primarily from the sale, redemption or exchange of ~~investments or when investments are carried at fair value with the periodic changes in fair values recorded in earnings.~~investments. The timing of gains or losses can have a material effect on periodic earnings. Investment gains and losses included in earnings usually have minimal impact on the periodic changes in our consolidated shareholders’ equity since most of our investments are recorded at fair value with the unrealized gains and losses included in shareholders’ equity as a component of accumulated other comprehensive income.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

We believe the amount of investment gains/losses included in earnings in any given period typically has little analytical or predictive value. Our decisions to sell securities are not motivated by the impact that the resulting gains or losses will have on our reported earnings. Although we do not consider investment gains and losses as necessarily meaningful or useful in evaluating our periodic results, we are providing information to explain the nature of such gains and losses when reflected in our earnings.

Pre-tax investment gains in the ~~third quarter and~~ first ~~nine~~six months of 2017 and 2016 were ~~$3.2~~$605 million and $2.5 billion, ~~and $5.6 billion,~~ respectively. ~~Investment~~Pre-tax investment gains in the ~~third~~first quarter of 2016 included $2.4 billion from the disposition of our Wrigley preferred stock investment and in the first nine months also included $610 million from the redemption of our Kraft Heinz Preferred Stock investment and $1.1 billion realized in connection with thetax-free exchange of shares of P&G common stock for 100% of the common stock of Duracell. Income tax expense allocated to investment gains included a benefit from the reduction of certain deferred income tax liabilities in connection with the exchange of P&G common stock for Duracell. ~~See Notes 8 and 9 to the accompanying Consolidated Financial Statements.~~Ourafter-tax gain from this transaction was approximately $1.9 billion. In ~~2015, pre-tax~~addition, investment gains ~~included non-cash holding gains related to our investment in Kraft Heinz of $6.8 billion~~ in the ~~third quarter, as well as net gains from dispositions of equity and fixed maturity securities of approximately $1.5 billion in the third~~second quarter and ~~$1.9 billion in the~~ first ~~nine months.~~

~~Investment gains/losses also included pre-tax other-than-temporary impairment (“OTTI”) charges of $63 million and $26 million in the first nine~~six months of 2016 included a pre-tax gain of $610 million from the redemption of our Kraft Heinz Preferred Stock investment for cash of $8.32 billion.

As of January 1, 2018, we will adopt a new accounting standard that changes the reporting of unrealized gains and ~~2015, respectively. Although~~losses on investments in equity securities and certain other investments. Upon adoption of this accounting standard, we ~~have periodically recorded OTTI charges in earnings in~~will reclassify the ~~past, we continue to hold certain of those securities. If the market values of those securities increase following the date OTTI charges were recorded in earnings, the increases~~net unrealized gains from such investments, which are ~~not~~presently reflected in earnings but are instead included in shareholders’ equity as a component of accumulated other comprehensive income. When recorded, OTTI charges have no impact whatsoever on the asset values otherwise recorded in our Consolidated Balance Sheets or on our consolidated shareholders’ equity. In addition, the recognition of such losses in earnings rather than in accumulated other comprehensive income, does not necessarily indicate that sales are planned and ultimately sales may not occur for a number of years. Furthermore, the recognition of an OTTI charge does not necessarily indicate that the loss in valueto retained earnings. The amount of the ~~security is permanent or that the market price of the security~~reclassification will ~~not subsequently increase to and ultimately exceed~~be based on our ~~original cost.~~

equity investments at December 31, 2017. As of ~~September~~June 30, ~~2016, gross~~2017, accumulatedafter-tax net unrealized appreciation related to our equity securities and other investments was approximately $50.6 billion. After December 31, 2017, the unrealized gains and losses on equity securities currently reported in other comprehensive income, as well as gains and losses realized from sales and dispositions, will be included in our periodic Consolidated Statements of Earnings. We do not expect the adoption of this standard will affect our total consolidated shareholders’ equity. However, it will likely produce a very significant increase in the volatility of our periodic net earnings given the magnitude of our existing equity securities portfolio and the inherent volatility of equity securities prices. In the first six months of 2017, our other comprehensive income included after-tax unrealized gains from equity securities and other investments of approximately $8.2 billion, compared to after-tax unrealized losses ~~on our investments~~of approximately $3.4 billion in ~~equity~~the first six months of 2016. These amounts would be included in earnings under the new accounting standard.

Item 2. Management’s Discussion and ~~fixed maturity securities determined on an individual purchase lot basis were approximately $1.4 billion,~~Analysis of which $941 million pertained to our investment in IBM common stock. We concluded that such losses were temporary. We consider several factors in determining whether or not impairments are deemed to be other than temporary, including the currentFinancial Condition and ~~expected long-term business prospects~~Results of Operations(Continued)

Investment and ~~if applicable, the creditworthiness of the issuer, our ability and intent to hold the investment until the price recovers and the length of time and relative magnitude of the price decline.~~Derivative Gains/Losses(Continued)

Derivative gains/losses ~~primarily represented~~currently represent the changes in fair value of our equity index put option contract liabilities. ~~Periodic~~The periodic changes in the fair values of ~~liabilities reflected~~these contracts are recorded in earnings and can be significant, reflecting the volatility of underlying equity markets and ~~from~~the changes in the inputs used to measure such liabilities.

~~In 2016, our equity index put option~~Derivative contracts producedpre-tax gains of ~~$458~~$395 million in the third quarter and pre-tax losses of $421 million for the first nine months. In each period, these gains and losses were primarily due to changes in the index values and interest rates and the passage of time. In 2015, our equity index put option contracts produced pre-tax losses of $802 million in the third quarter and pre-tax gains of $371 million in the first nine months. In the third quarter of 2015, the losses were driven by lower index prices and increased expected volatility assumptions, which produced an increase in the fair value of our liabilities. The third quarter losses offset much of the gains realized in the first six months of ~~2015, which~~2017 andpre-tax losses of $790 million in 2016. In July 2016, our last remaining credit default contract was terminated and thereafter, all of our derivative contract gains and losses derived from our equity index put option contracts. The gains in the first six months of 2017 were primarily attributable to ~~higher~~increased index ~~prices, a stronger U.S. Dollar~~values and ~~increased~~shorter contract durations, partly offset by unfavorable foreign currency exchange rate changes. The losses in 2016 were driven by lower index values and interest rates. As of ~~September~~June 30, ~~2016,~~2017, equity index put option intrinsic values were ~~approximately $1.6 billion~~$842 million and our recorded liabilities at fair value were approximately ~~$4.0~~$2.5 billion. Our ultimate payment obligations, if any, under our equity index put option contracts will be determined as of the contract expiration dates (beginning in 2018), and will be based on the intrinsic value as defined under the contracts.

In July 2016, our remaining credit default contract was terminated by mutual agreement with the counterparty and we paid $195 million upon termination. This contract produced pre-tax earnings of $89 million in the first nine months of 2016. We have no further exposure to losses under credit default contracts.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

A summary ofafter-tax other earnings ~~which include corporate income (including~~(losses) follows (in millions).

Our after-tax Kraft Heinz earnings includes Berkshire’s share of Kraft Heinz’s earnings attributable to common shareholders determined pursuant to the equity method. In the second quarter and first six months of 2016, Kraft Heinz earnings also included $180 million in pre-tax dividend income from our ~~investments in Kraft Heinz), expenses and income taxes not allocated to operating businesses is summarized below. Amounts are in millions.~~

~~Our earnings in 2016 from our investments in Kraft Heinz included lower dividends on the~~ Preferred Stock investment, which was redeemed in June 2016, and increased equity method earnings from our common stock investment. Our earnings, after allocated Berkshire corporate income taxes, were $146 million in the third quarter and $552 million in the first nine months of 2016. ~~In 2015, these investments produced earnings of $115 million in the third quarter and $315 million for the first nine months.~~

After-tax corporate interest expense was $116 million in the third quarter and $297 million for the first nine months of 2016 and $41 million and $216 million, respectively, in the comparable 2015 periods. The increases in 2016 reflected the impact of increased average borrowings. The variations in comparative periodic after-tax corporate interest expense also reflected the impact of foreign exchange gains and losses with respect to Euro denominated debt issued by Berkshire in March 2015 (€3.0 billion par) and March 2016 (€2.75 billion par). Corporate interest included after-tax foreign currency exchange losses of $48 million in the third quarter and $107 million in the first nine months of 2016 and $4 million and $106 million, respectively, in the comparable 2015 periods. Relatively minor changes in the U.S. Dollar/Euro exchange rate can produce significant gains or losses given the current level of our Euro-denominated borrowings.

~~Also included in~~ other earnings ~~are~~(losses) also include charges ~~related to~~arising from the application of the acquisition method in connection with Berkshire’s past business acquisitions. Such charges were primarily from the amortization of intangible assets recorded in connection with those business acquisitions. ~~These charges (after-tax) were $317~~

In each of the last three years, Berkshire issued Euro-denominated debt and at June 30, 2017, the aggregate par outstanding was €6.85 billion. Changes in foreign currency exchange rates can produce sizable non-cash gains and losses from the periodic revaluation of these liabilities into U.S. Dollars. After-tax corporate interest expense included foreign currency exchange rate losses in the second quarter and first six months of 2017 of $342 million and ~~$550~~$399 million, respectively, with respect to the revaluation of the Euro denominated debt. In 2016, after-tax corporate interest included foreign currency exchange rate gains of $101 million in the ~~third~~second quarter and losses of $60 million in the first ~~nine~~six months. Excluding these foreign currency gains and losses,after-tax corporate interest expense in the first six months of 2017 and 2016 ~~respectively, compared to $199~~was $131 million and ~~$400~~$121 million, ~~respectively, in the comparable periods in 2015.~~respectively. The increase was attributable to increased average outstanding borrowings.

Our balance sheet ~~continues to reflect~~reflects significant liquidity and a strong capital base. Our consolidated shareholders’ equity at ~~September~~June 30, ~~2016~~2017 was ~~$269.3~~approximately $300.7 billion, an increase of ~~$13.7~~about $17.7 billion since December 31, ~~2015.~~2016. Net earnings attributable to Berkshire shareholders in the first ~~nine~~six months of ~~2016~~2017 were ~~$17.8~~$8.3 billion. Net unrealized appreciation of investments and foreign currency translation gains included in other comprehensive income in the first six months of 2017 were approximately $8.2 billion and $1.2 billion, respectively.

At ~~September~~June 30, ~~2016,~~2017, our insurance and other businesses held cash, ~~and~~ cash equivalents and U.S. Treasury Bills of ~~$68.3~~approximately $86.1 billion and investments (excluding our investment in Kraft Heinz) of ~~$140.8~~$175.6 billion. In ~~June 2016, we received $8.32 billion in connection with the redemption of our Kraft Heinz Preferred Stock investment.~~

In January ~~2016, we used cash of approximately $32.1 billion to fund the acquisition of PCC, which we funded through a combination of cash on hand and $10 billion borrowed under a~~2017, Berkshire issued new ~~364-day revolving credit agreement. In March 2016, we issued €2.75~~senior notes aggregating €1.1 billion and $5.5 billion of senior unsecured notes. The proceeds were used in the repayment of all outstanding borrowings under the aforementioned revolving credit agreement. In June, the revolving credit agreement was terminated. See Note 16 to the accompanying Consolidated Financial Statements. In August 2016, we issued $750 million of senior unsecured notes to replace $750 million of maturing notes. Over the next twelve months,repaid $1.1 billion of ~~parent company~~maturing senior ~~notes~~notes. Berkshire term debt of $800 million will ~~mature.~~mature in February 2018. Berkshire’s debt outstanding at June 30, 2017 was $18.4 billion, an increase of $678 million from December 31, 2016, which was primarily due to foreign currency exchange rate changes applicable to €6.85 billion par of Euro-denominated senior notes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Our railroad, utilities and energy businesses (conducted by BNSF and BHE) maintain very large investments in capital assets (property, plant and equipment) and will regularly make significant capital expenditures in the normal course of business. In the first ~~nine~~six months of ~~2016,~~2017, capital expenditures were $1.8 billion by BHE and $1.5 billion by BNSF. We forecast the aggregate capital expenditures of these businesses ~~were approximately $6.4 billion, including $3.5 billion by BHE and $2.9 billion by BNSF. Forecasted capital expenditures of the two businesses~~ for the remainder of ~~2016~~2017 will approximate ~~$2.5 billion. Future~~$4.8 billion and we currently expect to fund such future capital expenditures ~~are expected to be funded from~~with cash flows from operations and debt issuances. In July 2017, BHE agreed to acquire approximately 80% of Oncor for $9 billion in cash and intends to acquire the remaining 20% in separate transactions. See Note 21 to the accompanying Consolidated Financial Statements.

BNSF’s outstanding debt ~~was approximately $22.2~~approximated $22.6 billion as of ~~September~~June 30, ~~2016,~~2017, an increase of ~~$429~~$508 million ~~from~~since December 31, ~~2015.~~2016. In March 2017, BNSF issued $1.25 billion of senior unsecured debentures with $500 million due in 2027 and $750 million due in 2047. Approximately $650 million of BNSF debentures matured in May 2017 and another $650 million mature in March 2018. Outstanding borrowings of BHE and its subsidiaries, excluding its borrowings from Berkshire insurance subsidiaries, were approximately ~~$36.6~~$38.1 billion ~~as of September~~at June 30, ~~2016,~~2017, an increase of ~~$643 million from~~$1.1 billion since December 31, ~~2015.~~2016. During the first six months of 2017, BHE and its subsidiaries issued approximately $1.275 billion of debt with maturity dates ranging from 2027 to 2057. Berkshire does not guarantee the repayment of debt issued by BNSF, BHE or any of their subsidiaries and is not committed to provide capital to support BNSF, or BHE or any of their subsidiaries.

Finance and financial products assets were approximately ~~$41.9~~$40.9 billion as of ~~September~~June 30, ~~2016, an increase~~2017, a decrease of ~~approximately $2.9 billion since~~$830 million from December 31, ~~2015.~~2016. Finance assets ~~at September 30, 2016~~consist primarily ~~consisted~~ of loans and finance receivables, ~~and~~ various types of property held for lease, ~~as well as significant~~ cash, ~~and~~ cash equivalents, ~~which included the proceeds of approximately $4.6 billion from the sale of our Wrigley preferred stock investment in September.~~

U.S. Treasury Bills and other investments. Finance and financial products liabilities ~~were~~decreased approximately ~~$21.1~~$1.9 billion to approximately $17.8 billion as of ~~September~~June 30, ~~2016, an increase~~2017. The decrease was primarily due to a reduction in borrowings of approximately ~~$3.9~~$1.6 billion, ~~compared to December 31, 2015. The year-to-date increase was primarily attributable to new debt~~reflecting repayments and maturities of $2.9 billion, partly offset by $1.3 billion of senior unsecured notes issued in January by a wholly-owned financing subsidiary, Berkshire Hathaway Finance Corporation (“BHFC”)~~, including $3.5~~. The new BHFC notes mature in 2019 and 2020. BHFC’s outstanding borrowings were $13.2 billion at June 30, 2017. Over the remainder of 2017, $400 million of BHFC senior notes ~~issued~~will mature and an additional $4.1 billion will mature in ~~March. See Note 16 to~~ the ~~accompanying Consolidated Financial Statements. The proceeds were~~first six months of 2018. BHFC’s senior note borrowings are used to fund loans originated and acquired by Clayton Homes and ~~to fund~~ a portion of ~~existing~~ assets held for lease by our ~~rail tank car~~UTLX railcar leasing ~~business, UTLX. Over~~business. Berkshire guarantees the ~~next twelve months, $2.8 billion~~full and timely payment of ~~BHFC~~principal and interest with respect to BHFC’s senior ~~notes~~notes.

Berkshire’s Board of Directors has authorized Berkshire management to repurchase, at its discretion, Berkshire Class A and Class B common stock at prices no higher than a 20% premium over book value. There is no obligation to repurchase any stock and the program is expected to continue indefinitely. We will ~~mature.~~not repurchase our stock if it reduces the total amount of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bills holdings below $20 billion. Financial strength and redundant liquidity will always be of paramount importance at Berkshire. There were no repurchases in 2017.

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~~included 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~~statements, but will be ~~reflected~~recognized in future periods as the goods are delivered or services are provided.

~~During~~The timing and amount of the ~~first nine months~~payments under certain contracts, such as insurance and reinsurance contracts, are contingent upon the outcome of ~~2016,~~future events and claim settlements. Actual payments will likely vary, perhaps materially, from the estimated liabilities currently recorded in our Consolidated Balance Sheet. As previously discussed, we ~~issued new term debt~~entered into a retroactive reinsurance agreement with AIG, which became effective in February 2017. In connection with this agreement, we recorded liabilities of $16.4 billion for unpaid losses and ~~assumed debt through~~loss adjustment expenses, representing our current estimate of the ~~PCC business acquisition. Future~~claims we ultimately expect to pay under the agreement. We estimate future payments ~~of principal~~under this agreement as follows: 2020-2021 – $3.6 billion and ~~interest related to such borrowings are summarized~~thereafter – $12.8 billion; however, as ~~follows (in millions): 2016 - $225; 2017 - $424; 2018 - $3,905; 2019 - $3,362; and 2020 and after - $15,756.~~ generally noted above, actual payments under this agreement will likely vary, perhaps materially, from these estimates.

Except as otherwise disclosed in this Quarterly Report, our contractual obligations as of ~~September~~June 30, ~~2016~~2017 were, in the aggregate, not materially different from those disclosed in the “Contractual Obligations” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Berkshire’s Annual Report on Form10-K for the year ended December 31, ~~2015.~~2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

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. Reference is made to “Critical Accounting Policies” discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Berkshire’s Annual Report on Form10-K for the year ended December 31, ~~2015.~~2016.

Our Consolidated Balance Sheet as of ~~September~~June 30, ~~2016~~2017 includes estimated liabilities for unpaid losses from property and casualty insurance and reinsurance contracts of approximately ~~$75.5~~$95 billion. Due to the inherent uncertainties in the process of establishing ~~these liabilities,~~loss reserve amounts, the actual ultimate claim ~~liabilities~~amounts will likely differ from the currently recorded amounts. A very small percentage change in estimates of this magnitude ~~could have~~will result in a material effect on ~~our~~ periodic earnings. The effects from changes in these estimates are recorded as a component of insurance losses and loss adjustment expenses in the period of the change.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

Our Consolidated Balance Sheet as of ~~September~~June 30, ~~2016~~2017 includes goodwill of acquired businesses of approximately ~~$79~~$80 billion. We evaluate goodwill for impairment at least annually and we conducted our most recent annual review during the fourth quarter of ~~2015.~~2016. Although we believe that the goodwill reflected in the Consolidated Balance Sheet is not impaired, goodwill may subsequently become impaired as a result of changes in facts and circumstances ~~that adversely affect~~affecting the ~~valuations~~valuation of the reporting ~~units.~~unit. A goodwill impairment charge could have a material effect on periodic earnings.

Our Consolidated Balance Sheets include significant derivative contract liabilities with respect to our long-duration equity index put option contracts. The fair values recorded for these liabilities are based on valuation models that utilize various inputs and assumptions that we believe are used by market participants. We further believe that fair values based on such models are inherently subjective and the values in an actual transaction may differ significantly from the model values. Changes in the assumptions utilized within the valuation models may have a significant effect on recorded fair values and periodic earnings.

Information concerning new accounting pronouncements is included in Note 2 to the accompanying Consolidated Financial Statements.

Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statements of Berkshire officials during presentations about Berkshire or its subsidiaries are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects and possible future Berkshire actions, which may be provided by management, are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and assumptions about Berkshire and its subsidiaries, economic and market factors and the industries in which we do business, among other things. These statements are not guarantees of future performance and we have no specific intention to update these statements.

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The ~~principal~~important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, changes in market prices of our investments in fixed maturity and equity securities, losses realized from derivative contracts, the occurrence of one or more catastrophic events, such as an earthquake, hurricane, or act of terrorism or cyber attack that causes losses insured by our insurance subsidiaries and/or losses to our business operations, changes in laws or regulations affecting our insurance, railroad, utilities and energy and finance subsidiaries, changes in federal income tax laws, and changes in general economic and market factors that affect the prices of securities or the industries in which we do business.

Reference is made to Berkshire’s most recently issued Annual Report and in particular the “Market Risk Disclosures” included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of ~~September~~June 30, ~~2016,~~2017, there were no material changes in the market risks described in Berkshire’s Annual Report on Form10-K for the year ended December 31, ~~2015.~~2016.

As of the end of the period covered by this Quarterly Report on Form10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule13a-15. Based upon that evaluation, the Chairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer) concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings. During the quarter, there have been no significant changes in the Company’s internal control over financial reporting or in other factors that could significantly affect internal control over financial reporting.

WeBerkshire and its subsidiaries are parties in a variety of legal actions that routinely arise out of the normal course of business, including legal actions seeking to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. We do not believe that such normal and routine litigation will have a material effect on our financial condition or results of operations. Berkshire and certain of its subsidiaries are also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We believe that any liability that may arise as a result of other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.

Our significant business risks are described in Item 1A to Form10-K for the year ended December 31, ~~2015~~2016 to which reference is made herein.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities

Berkshire’s Board of Directors (“Berkshire’s Board”) has approved a common stock repurchase program under which Berkshire may repurchase its Class A and Class B shares at prices no higher than a 20% premium over the book value of the shares. Berkshire may repurchase shares in the open market or through privately negotiated transactions. Berkshire’s Board authorization does not specify a maximum number of shares to be repurchased. However, repurchases will not be made if they would reduce the total value of Berkshire’s consolidated cash, ~~and~~ cash equivalents and U.S. Treasury Bills holdings below $20 billion. The repurchase program is expected to continue indefinitely and the amount of repurchases will depend entirely upon the level of cash available, the attractiveness of investment and business opportunities either at hand or on the horizon, and the degree of discount of the market price relative to management’s estimate of intrinsic value. The repurchase program does not obligate Berkshire to repurchase any dollar amount or number of Class A or Class B shares and there is no expiration date to the program. There were no share repurchases under the program in the first ~~nine~~six months of ~~2016.~~2017.

Information regarding the Company’s mine safety violations and other legal matters disclosed in accordance with Section 1503(a) of the Dodd-Frank Reform Act is included in Exhibit 95 to this Form10-Q.

Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


		Class A —		~~784,669~~755,437
		Class B —		~~1,289,055,322~~1,333,772,187


		Page No.
Part I – Financial Information

Item 1. Financial Statements
	Consolidated Balance Sheets—~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016		22-3
	Consolidated Statements of Earnings—~~Third~~Second Quarter and First ~~Nine~~Six Months ~~2016~~2017 and ~~2015~~2016		4
	Consolidated Statements of Comprehensive Income—~~Third~~Second Quarter and First ~~Nine~~Six Months ~~2016~~2017 and ~~2015~~2016		5
	Consolidated Statements of Changes in Shareholders’ Equity—First ~~Nine~~Six Months ~~2016~~2017 and ~~2015~~2016		5
	Consolidated Statements of Cash Flows—First ~~Nine~~Six Months ~~2016~~2017 and ~~2015~~2016		6
	Notes to Consolidated Financial Statements		7-24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~25-43~~25-42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		4443
Item 4.	Controls and Procedures		4443

Part II – Other Information

Item 1.	Legal Proceedings		4443
Item 1A.	Risk Factors		4443
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities		4443
Item 3.	Defaults Upon Senior Securities		4443
Item 4.	Mine Safety Disclosures		4443
Item 5.	Other Information		4443
Item 6.	Exhibits		4544

Signature			4544


	~~First Nine Months~~
	~~2015~~
~~Revenues~~		$	~~167,315~~
~~Net earnings attributable to Berkshire Hathaway shareholders~~			~~19,086~~
~~Net earnings per equivalent Class A common share attributable to Berkshire Hathaway shareholders~~			~~11,615~~


	July 1, 2017		December 31, 2016
Assets		$119,416		$120,480
Liabilities		60,870		62,906


	October 2, 2016		January 3, 2016
Assets		$121,080		$122,973
Liabilities		63,212		56,737


	Cost				Fair Value
	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Insurance and other	$	9,970	$	9,970	$	15,415	$	15,998
Finance and financial products		1,000		3,052		2,078		5,719

	$	10,970	$	13,022	$	17,493	$	21,717


	Carrying Value
	September 30, 2016		December 31, 2015
Common stock		$15,711		$15,714
Preferred Stock		—		7,710

		$15,711		$23,424


	September 30, 2016			December 31, 2015
Raw materials		$	2,909		$	1,852
Work in process and other			2,461			778
Finished manufactured goods			4,287			3,369
Goods acquired for resale			6,106			5,917

		$	15,763		$	11,916


	June 30, 2017			December 31, 2016
Insurance premiums receivable	$	11,124		$	10,462
Reinsurance recoverable on unpaid losses		3,076			3,338
Trade and other receivables		15,089			13,630
Allowances for uncollectible accounts		(336	)		(333)

	$	28,953		$	27,097


	2017		2016
Unpaid losses and loss adjustment expenses—beginning of year:
Gross liabilities	$	76,918	$	73,144
Reinsurance recoverable and deferred charges		(11,385)		(10,994)

Net balance		65,533		62,150

Incurred losses and loss adjustment expenses with respect to:
Current accident year events		16,980		14,898
Prior accident years’ events		(199)		(1,071)
Retroactive reinsurance and discount accretion		10,532		883

Total incurred losses and loss adjustment expenses		27,313		14,710

Paid losses and loss adjustment expenses with respect to:
Current accident year events		(6,656)		(6,049)
Prior accident years’ events		(7,265)		(6,512)
Retroactive reinsurance		(618)		(534)

Total payments		(14,539)		(13,095)

Foreign currency translation adjustment		327		(168)

Unpaid losses and loss adjustment expenses—June 30:
Net balance		78,634		63,597
Reinsurance recoverable and deferred charges		16,673		11,111

Gross liabilities	$	95,307	$	74,708


	Weighted Average Interest Rate		June 30, 2017		December 31, 2016
Railroad, utilities and energy:
Issued by Berkshire Hathaway Energy Company (“BHE”) and its subsidiaries:
BHE senior unsecured debt due 2018-2045		5.4%	$	7,420	$	7,818
Subsidiary and other debt due 2017-2064		4.6%		30,729		29,223
Issued by BNSF due 2017-2097		4.8%		22,552		22,044

			$	60,701	$	59,085


	Class A, $5 Par Value (1,650,000 shares authorized)							Class B, $0.0033 Par Value (3,225,000,000 shares authorized)
	Issued		Treasury		Outstanding			Issued		Treasury		Outstanding
Balance at December 31, 2015		820,102		(11,680)		808,422			1,253,866,598		(1,409,762)		1,252,456,836
Conversions of Class A common stock to Class B common stock and exercises of replacement stock options issued in a business acquisition		(22,628)		—		(22,628	)		34,899,211		—		34,899,211

Balance at September 30, 2016		797,474		(11,680)		785,794			1,288,765,809		(1,409,762)		1,287,356,047


		a. Exhibits

~~3(ii)~~		~~By-Laws~~ ~~Incorporated by reference to Exhibit 3(ii) to Form 8-K filed on May 4, 2016.~~

12		Calculation of Ratio of Consolidated Earnings to Consolidated Fixed Charges

31.1		Rule13a-14(a)/15d-14(a) Certifications

31.2		Rule13a-14(a)/15d-14(a) Certifications

32.1		Section 1350 Certifications

32.2		Section 1350 Certifications

95		Mine Safety Disclosures

101		The following financial information from Berkshire Hathaway Inc.’s Quarterly Report on Form10-Q for the quarter ended ~~September~~June 30, ~~2016,~~2017, formatted in XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, (ii) the Consolidated Statements of Earnings for each of the three-month and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, (iii) the Consolidated Statements of Comprehensive Income for each of the three-month and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for each of the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, (v) the Consolidated Statements of Cash Flows for each of the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, and (vi) the Notes to Consolidated Financial Statements, tagged in summary and detail.


		BERKSHIRE HATHAWAY INC. (Registrant)

Date: ~~November~~August 4, ~~2016~~2017		/S/ MARC D. HAMBURG
		(Signature)
		Marc D. Hamburg,
		Senior Vice President and
		Principal Financial Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company