Berkshire Hathaway, the Warren Buffett-run holding company and conglomerate, has reported an underwriting profit of $244 million across its insurance and reinsurance operations for the fourth quarter of 2022, although for the full year 2022, insurance underwriting generated a loss of $90 million.
The after-tax loss for the year compares with an underwriting gain of $728 million a year earlier, and includes losses from significant catastrophe events of $2.4 billion, up $100 million from 2021.
Berkshire adds that its underwriting results were also negatively impacted by increases in private passenger automobile claims frequencies and severities at GEICO.
At the same time, high earnings from reinsurance underwriting and foreign currency exchange rate gains had a favourable impact on the underwriting performance for the year.
At Berkshire Hathaway Reinsurance Group, the underwriting result improved significantly, ending 2022 at a profit of $1.389 billion, compared to a loss of $930 million in 2021 and a loss of $2.7 billion in 2020.
The improved result is attributable to the property and casualty segment, which saw its underwriting result increase from $667 million in 2021 to $2.18 billion in 2022, while the life and health unit moved from an underwriting loss of $421 million in 2021 to a gain of $292 million in 2022.
Within property and casualty, losses and loss adjustment expenses increased $727 million in 2022, as losses incurred from catastrophe events hit $2 billion, of which $1.6 billion relates to Hurricane Ian.
Across the reinsurance business, premiums earned jumped from $20.2 billion to $21.9 billion, again driven by growth in the property and casualty segment, primarily due to net increases in new property business and higher rates, as well as the inclusion of TransRe ($968 million) following Berkshire’s takeover of Alleghany Corporation.
At Berkshire Hathaway Primary Group, underwriting income fell from $607 million in 2021 to $393 million in 2022, as losses and loss adjustment expenses increased to $9.9 billion, and underwriting expenses rose to $3.5 billion.
However, primary insurance premiums written rose from $12.6 billion to $14.6 billion, which reflects increases at BH Specialty, USLI, BHHC, and MedPro Group, as well as the inclusion of Alleghany Insurance, which amounts to $435 million.
Incurred losses from catastrophe events reached $641 million in 2022 at Berkshire Hathaway Primary Group, driven mostly by a $554 million cost related to Hurricane Ian.
At GEICO, which writes private passenger automobile insurance, Berkshire highlights the continuation of changes in average claims frequencies and severities in 2022, which saw losses and loss adjustment expenses rise from $30.1 billion in 2021 to $36.3 billion in 2022.
As a result, GEICO has reported an underwriting loss of $1.88 billion for 2022 compared with a gain of $1.259 billion in 2021, and a gain of $3.428 billion in 2020.
So, despite the better underwriting performance of the reinsurance business, the steep loss at GEICO and the dip in underwriting income at the primary insurance arm more than offset this, leading to the re/insurance underwriting loss of $90 million for the year.
Turning to the asset side of the insurance and reinsurance operations, and the company has today reported that float stood at $164 billion at the end of 2022, up from $147 billion a year earlier. Berkshire notes that the 2022 figure includes $14 billion attributable to Alleghany’s insurance and reinsurance businesses.
