(Bloomberg) – Warren Buffett's Berkshire Hathaway Inc. hit a speed bump in thefirst quarter as insurance units posted an underwriting loss,overshadowing gains at the company's railroad and energybusiness.

Over the past five decades, he's transformed Berkshire from astruggling textile business into a financial powerhouse withinsurance, energy, retail, transportation and manufacturing units.With an eye toward value and long-term thinking, his stock picksand acquisitions have helped propel steady increases in thecompany's earnings.

'Insurance results can be volatile'

Buffett has said there will be blips in that record, in partbecause insurance results can be volatile. First-quarter operatingprofit slipped 4.8 percent to $3.56 billion, the company saidFriday in a statement.

The result was driven by underwriting losses at Berkshire'snamesake reinsurance group and General Re unit, whichboth incurred costs tied to a cyclone in Australia. Pretaxprofit fell 34 percent at Geico, which sells autocoverage.

Despite the occasional setback, insurance has been a significantmoneymaker for Berkshire, generating annual underwriting profitsfor more than a decade. The businesses also provide Buffett withbillions of dollars of “float” — or premiums held before payingclaims — that he can invest.

Hauling coal

Berkshire's largest unit, railroad Burlington Northern Santa Fe,added $838 million to net income, 6.9 percent more than in the sameperiod of 2016, according to a regulatory filing. BNSF and itscompetitors have benefited this year from a rebound in coal volumesafter a surge in prices for natural gas, a rival energy source.

Still, carriers aren't counting on a sustained rebound in coal,because power producers have been shifting away from the fossilfuel. BNSF also saw an increase in car shipments over its networkafter it won business from a new automotive customer.

The manufacturing, service and retail segment added $1.32billion to earnings, compared with $1.27 billion a year earlier.The division includes companies like Dairy Queen, NetJets, Fruit ofthe Loom and Precision Castparts, a supplier to the aerospaceindustry that Buffett bought last year in one of his biggestacquisitions. Profit fell at the industrial products segment, asthe Lubrizol chemicals unit had pretax losses of $184 million onthe exit from an “ underperforming” business, asset impairments andrestructuring charges, according to the filing.

Cash pile

The contribution from Berkshire Hathaway Energy rose to $501million from $441 million a year earlier. The business operateselectric grids in the U.K., natural gas pipelines that stretch fromthe Great Lakes to Texas and power companies in states includingIowa and Nevada.

Related: AIG to pay Berkshire $9.8 billion in insurancetransfer deal

Bill Smead, a Seattle-based money manager who is in Omaha forthe meeting, welcomed the gains at the railroad and other operatingbusinesses and wasn't worried about the insurance results.

“The catastrophic losses, you can't do anything about,'' hesaid. “Much more important to shareholders is that Buffett isburying himself in cash.''

Berkshire's war chest totaled $96.5 billion at the end of thefirst quarter, a record. The climbing cash balance has caused someanalysts and investors to speculate that Buffett could do a dealthat's big even by his standards.

While he waits for the right opportunity, Buffett's been buyinglots of stocks. In February, he said that he'd built Berkshire'sholding in Apple Inc. to more than $18 billion. His company alsoamassed stakes in the four largest U.S. airlines — AmericanAirlines Group Inc., Delta Air Lines Inc., Southwest Airlines Co.and United Continental Holdings Inc.

Stocks, bonds

Investors are likely to ask Buffett and Berkshire Vice ChairmanCharles Munger about those holdings during the all-day,question-and-answer session with the executives on Saturday. Formuch of his career, Buffett avoided investing in technologycompanies, and he spent years criticizing airlines as terriblebusinesses.

In all, Buffett and his deputy investment managers, Todd Combsand Ted Weschler, spent $10.6 billion on equities in the quarterwhile selling $3.5 billion in stock. For fixed-income securities,there were $45.3 billion of purchases, compared with a combined $34billion of sales, redemptions and maturities. Berkshire's stockportfolio was valued at $135 billion at the end of March, with thelargest allocation to financial companies.

Related: Berskshire's Jain tells Gen Re staff to fix'problem' with costs

Berkshire's net income slumped 27 percent to $4.06 billion inthe period. The figure was hurt by a drop in investment gains. Inlast year's first quarter, Berkshire recorded a one-time gain ofalmost $2 billion from a deal that involved exchanging Procter& Gamble Co. stock for the consumer company's Duracell batterybusiness.

Book value, a measure of assets minus liabilities that's closelytracked by investors, rose 3.5 percent in the first quarter to$178,073 per share. Berkshire has climbed 2.4 percent this year inNew York to $250,000. Results were released after the close ofregular trading.

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