Berkshire Hathaway's quarter three numbers seem fairly run-of-the-mill when looking a bottom-line report: an 8.6% decline due to some investment losses, ending at $3.6 billion according to earnings report.
Add Berkshire's 40% jump in operating income in its insurance and reinsurance operations, however, and Warren Buffett's company increased pretax underwriting profits nearly four-fold, to $976 in the quarter.
Much of this growth is attributed to Berkshire Hathaway Reinsurance Group, which reported a $2.9 billion gain in property/casualty premiums thanks to a deal with
Liberty Mutual announced in July. The
GEICO division of the company also added half-a-billion dollars to the company despite actually posting a decline in underwriting profit.
Berkshire Hathaway Primary Group also performed well, with a more than 30% increase in earned premiums.
Together, Berkshire’s insurance and reinsurance operations posted a 50% spike in earned premiums for the quarter, amounting to $11.2 billion and setting property/casualty premiums for the company at $27.1 billion—up 20% this year.
The results beat analyst expectations and sent the stock moving upward.
“Since the beginning of the year, Berkshire’s shareholders’ equity has increased US$15.6 billion and our book value per Class A equivalent share has increased by 7.1% to US$144,542 as of September 30, 2014,” the company statement said.
“Insurance float (the net liabilities we assume under insurance contracts) at September 30, 2014 was approximately US$83 billion as compared to approximately US$77 billion at December 31, 2013,” it adds.
