Warren Buffett’s Berkshire Hathaway has reported a P&C reinsurance pre-tax underwriting loss of $706 million for the first nine months of 2020 against a gain of $472 million a year earlier, as loss and loss adjustment expenses increased by 48% to $2.4 billion.
The elevated level of catastrophe losses during the period includes an estimated $688 million of losses attributable to the COVID-19 pandemic, while the impacts of Hurricanes Laura and Sally added $308 million to the firm’s Q3 2020 cat bill.
Additionally, losses in 9M 2020 also included a net increase in estimated ultimate liabilities for prior years’ loss events of $342 million, compared with a net decrease of $75 million in 2019. According to Berkshire, this increase was primarily driven by legacy environmental, asbestos and other latent injury claims.
Furthermore, underwriting expenses in 9M 2020 increased by almost 24% as a result of increased commission expense on the higher premium volume.
While the underwriting result was hit by catastrophe losses and COVID-19, Berkshire has announced P&C reinsurance premium growth of 63% in Q3 and 32.6% in 9M 2020, primarily attributable to a few new property and liability contracts and increased participations on renewals.
And, while the segment’s underwriting performance for both the quarter and the nine-month period declined year-on-year, the P&C unit was one of the better performers across the firm’s reinsurance operation. Overall, Berkshire’s reinsurance segment fell to an underwriting loss of $441 million for Q3 and a loss of more than $2 billion for 9M 2020, against a gain of $52 million and a loss of $305 in 2019, respectively.
In total, Berkshire has reported that its insurance and reinsurance underwriting fell to a loss of $213 million in Q3 2020 against a gain of $440 million for the same period in 2019. For 9M 2020, the re/insurance underwriting result declined to $956 million, compared with $1.2 billion for the same period in 2019.