BHSI parent suffers blow in Q3 and 9M

Underwriting losses among culprits

BHSI parent suffers blow in Q3 and 9M

Insurance News

By Terry Gangcuangco

The parent company of Berkshire Hathaway Specialty Insurance (BHSI), Berkshire Hathaway Inc., has released its financial results for the quarter and nine months ended September 30, and the numbers point to losses in both periods.

In Q3, the Omaha-headquartered company posted US$2.69 billion in net losses attributable to Berkshire shareholders. In the same quarter last year, Berkshire enjoyed US$10.34 billion in attributable net earnings.

The first nine months, meanwhile, saw a dive – from 2021’s US$50.15 billion in net earnings – to US$40.98 billion in net losses attributable to shareholders this time around.

The net losses include investment and derivative losses worth US$10.45 billion and US$65.07 billion, respectively, in the quarter and 9M. A year ago, Berkshire reported investment and derivative gains.

Operating earnings, both higher than their 2021 counterparts, stood at US$7.76 billion and US$24.08 billion for Q3 and the nine-month span, respectively.

Of the operating earnings in both the quarter and nine months, only insurance underwriting contributed negative results. The underwriting loss in the three months ended September 30 was US$962 million, which is bigger than the underwriting loss in Q3 2021.

For the first nine months, Berkshire’s underwriting loss amounted to US$334 million – a reversal from last year’s underwriting income.

Lifting the lid on the underwriting figures, Berkshire noted: “After-tax incurred losses attributable to significant catastrophe occurrences in the third quarter were approximately US$2.7 billion from Hurricane Ian in 2022 and US$1.7 billion from Hurricane Ida and floods in Europe in 2021.

“Underwriting results in 2022 were also negatively impacted by increases in private passenger automobile claims frequencies and severities, and favourably impacted by higher foreign currency exchange rate gains arising from the remeasurement of non-US dollar denominated liabilities of our US insurance subsidiaries and improved life and health reinsurance results.”  

Berkshire’s other earnings contributors, which posted positive results, are investment income (insurance); railroad; utilities and energy; manufacturing, service, and retailing; and others.

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