For the first quarter of 2016,
Berkshire Hathaway Inc.'s insurance units posted an underwriting gain of $213 million—55.6% lower than what the company posted for the same period last year.
“Our insurance businesses generated lower earnings in the first quarter of 2016 compared to 2015, due primarily to comparatively lower gains from Berkshire Hathaway Reinsurance Group's property and casualty business and lower foreign currency exchange rate gains attributable to certain of its foreign currency denominated liabilities,” the insurer stated in a quarterly report submitted to the Securities and Exchange Commission Friday.
The company’s General Reinsurance Corp. unit generated an underwriting gain of $42 million for Q1 2016, which makes it an improvement from the $47 million loss the unit took during the same period last year. Its property/casualty written premiums fell by 16.1% to $992 million, while life/health also decreased by 3.5% to $740 million. In total, written premiums dropped 11.2% to $1.73 billion for the company.
“Our premium volume declined in both the direct and broker markets worldwide. Insurance industry capacity remains high, and price competition in most property/casualty reinsurance markets persists,” Berkshire Hathaway said in its report. “We continue to decline business when we believe prices are inadequate. However, we remain prepared to write substantially more business when more appropriate prices can be attained relative to the risks assumed.”
Berkshire Hathaway Reinsurance Group posted an underwriting loss of $79 million for the first quarter of the year compared to the $459 million it previously posted for the same period last year, indicating losses in the company’s life annuity business.
On the other hand, written premiums for the reinsurance group’s property/casualty business increased by 17.3% to $1.61 billion.
“These increases were primarily attributable to the quota-share contract with Insurance Australia Group Ltd., which became effective on July 1, 2015, partially offset by lower premiums from property catastrophe and other property/casualty business,” the company’s report detailed. “Our premium volume is generally constrained for most property/casualty coverages, and for property catastrophe coverages in particular as rates, in our view, are generally inadequate. However, we have the capacity and desire to write substantially more business when appropriate pricing can be obtained.”
The company’s pretax underwriting gain for its property/casualty operations took a 69.0% hit, down to $126 million.
Berkshire’s Primary Group, composed of insurers such as National Indemnity Co. and
GEICO, posted pretax underwriting gains of $121 million for the first quarter of 2016—30.9% lower than the group posted a year earlier. The group’s earned premiums rose by 19.1% to $1.44 billion.
