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Berkshire Hathaway earnings dip offset by P&C reinsurance gains

4th November 2019 - Author: Matt Sheehan

Warren Buffett’s property and casualty (P&C) reinsurance businesses at Berkshire Hathaway have reported underwriting earnings of $314 million, helping to offset an overall decline in earnings for the company during the third quarter of 2019.

Berkshire HathawayThe P&C reinsurance underwriting result was almost five times higher than the $67 million reported in Q3 2018 despite the impact of $281 million of losses stemming from Typhoon Faxai.

The company added that its Q4 results will likely be negatively impacted by losses from Typhoon Hagibis.

The P&C segment – which includes reinsurance subsidiary Gen Re – also recorded a 21% increase in premiums earned, which came out at $2.6 billion for the quarter.

Berkshire Hathaway’s overall net earnings, however, declined 11% to $16.5 billion, compared with $18.5 for the same period last year.

This result was partly due to a 27% dip in investment income, which was $8.5 billion in Q3 2019, versus $11.5 billion last year. In contrast, earnings from insurance investment income rose 19.8% to $1.5 billion.

Looking at the first nine months of the year, the picture is reversed, with Berkshire Hathaway improving overall net earnings, but with the P&C reinsurance segment faring worse than last year.

Net earnings for the whole company surged by 78% to $52.3 billion, boosted by a 214% increase in investments, which amounted to $31.7 billion for the nine-month period.

But underwriting earnings for P&C reinsurance were down 12% to $472 million, despite 12% growth in premiums earned.

Berkshire Hathaway also reported a $4 billion increase in insurance float over the first nine months of the year, which was recorded at $127 billion at September 30, 2019, up from $123 billion at December 31, 2018.

Notably, the company ended the quarter with a record $128.2 billion, which could reflect a lack of opportunities for large acquisitions, analysts have suggested.

Operating earnings increased by 14% to $7.9 billion for the Q3 period, and by 2.6% to $19.6 for the nine-month period.

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