Berkshire Hathaway, the Warren Buffett-run holding company and conglomerate, has reported a strong underwriting performance in its property and casualty (P&C) reinsurance business for the third quarter and first nine months of 2023, as premium growth continued.
In both periods, all of Berkshire’s insurance operations produced an improved underwriting result when compared with the prior year, resulting in net insurance underwriting earnings of $2.4 billion for Q3 and $4.6 billion for 9M 2023, compared with a loss of $1.1 billion and a loss of $190 million, respectively, in 2022.
Within Berkshire Hathaway Reinsurance Group, the performance of the P&C book improved significantly year-on-year.
P&C reinsurance premiums written rose to $5.4 billion from $4.6 billion in the third quarter, and from $13.1 billion to $17.6 billion in the nine month period. While premium earned increased from $4 billion in Q3 2022 to $5.7 billion in Q3 2023, and from $11 billion in 9M 2022 to $16.2 billion in 9M 2023. Written premiums in Q3 and 9M 2023 included $1.4 billion and $4 billion, respectively, written by TransRe Group.
Loss and loss adjustment expenses within the segment were $2.9 billion in the quarter and $9.1 billion in the nine month period, of which $881 million and $2.4 billion, respectively, came from TransRe Group.
Losses incurred from significant catastrophes fell significantly in the nine month period, from $2.5 billion in 2022, which was driven by Hurricane Ian, to $552 million in 2023.
Additionally, reductions in estimated ultimate liabilities for losses occurring in prior accident years were $1.5 billion in the first nine months of 2023, compared with $1.4 billion in the first nine months of 2022. Overall, the loss ratio decreased 15.4 percentage points in the first nine months of 2023 compared to 2022, reports the firm.
All in all, the P&C reinsurance book delivered pre-tax underwriting earnings of almost $1.5 billion in Q3 2023 compared with just $23 million a year earlier. For 9M 2023, underwriting earnings hit more than $3 billion, up from $1.4 billion in 9M 2022.
The P&C reinsurance combined ratio strengthen considerably in both periods, to 74.1% in Q3 2023 compared with 99.4% a year earlier, and to 81.5% in 9M 2023, compared with 87.2% a year earlier.
Within the Berkshire life and health (L&H) reinsurance arm, premiums written increased slightly in the quarter to $1.33 billion, but fell slightly for 9M 2023 to $3.7 billion. It’s the same for premiums earned, which rose slightly to $1.3 billion in Q3 2023, but fell to $3.7 billion in the nine month period.
Pre-tax underwriting earnings in L&H reinsurance improved from $18 million to $50 million in Q3 2023, and rose from $116 million to $234 million in 9M 2023.
Overall, the reinsurance business produced underwriting earnings of $1.4 billion in Q3 2023, up from a loss of $251 million a year earlier. For 9M 2023, the reinsurance underwriting result rose to $2.5 billion, compared with $1.2 billion in 2022.
Moving away from reinsurance and turning to Berkshire Hathaway Primary Group, pre-tax underwriting profit amounted to $510 million for the quarter, up from a loss of $281 million a year earlier. For 9M 2023, the segment’s underwriting earnings exceeded $1 billion, compared with just $53 million in 9M 2022.
Premiums written rose 28% to almost $5 billion in Q3 2023, and by almost 29% to $13.9 billion in 9M 2023. Premiums earned also rose for both periods, to $4.5 billion in the quarter and $12.6 billion in the nine month period.
The segment has reported incurred losses from significant catastrophes occurring in the first nine months of $35 million in 2023, compared with $740 million in 2022.
At GEICO, which primarily writes private passenger automobile insurance, pre-tax underwriting earnings totalled $1.1 billion compared with a loss of $759 million a year earlier. The 9M underwriting performance also improved, from a loss of $1.4 billion to a gain of $2.3 billion.
Premiums written increased $283 million in the third quarter to $10.4 billion, and were substantially unchanged in the first nine months of 2023 compared to 2022, at $29.9 billion.
Losses and loss adjustment expenses declined $1.6 billion in the third quarter and $3.1 billion in the first nine months of 2023, to $7.9 billion and $24.1 billion, respectively.
Berkshire Hathaway also reports on its insurance investment float for the first nine months of the year, which reached $167 billion at September 30th, 2023, up from $164 billion as at December 31st, 2022.
