Berkshire Hathaway's insurance operations “shot the lights out”in 2012, says CEO Warren Buffett in a letter to shareholders.

The conglomerate's insurance divisions recorded an underwritingprofit of $1.6 billion in 2012 compared to $248 million the prioryear as Berkshire posted net earnings for the year of $14.8billion, up from $10.3 billion in 2011.

Buffett says it was the 10^th consecutive year ofunderwriting profits for insurance operations, which also suppliedthe investor with $73 billion of “free” money to invest—premiumscollected now to pay claims later, also termed “float” byBuffett.

“This is truly having your cake and eating it too,” hewrites.

Direct auto insurer Geico led the way, turning in anunderwriting profit of $680 million in 2012. The profit would havebeen $410 million more if not for a change in accounting rules atthe start of 2012, Buffett says.

“When I count my blessings, I count Geico twice,” says Buffett,who continues by pointing out the insurer's results wereaccomplished in the face of its largest single loss inhistory—Superstorm Sandy.

“We insured 46,906 vehicles that were destroyed or damaged inthe storm,” says Buffett. Sandy cost Geico more than three timesits previous record-setting loss—Hurricane Katrina in 2005.

Geico took losses of $490 million Sandy during 2012's fourthquarter and booked catastrophe losses of $638 million for theyear.

Berkshire insurance operations recorded aggregate pre-tax lossesof about $1.1 billion from Sandy.

Geico's premiums increased 9 percent to $16.7 billionyear-over-year, from an increase in policy count, and anincrease in premium per policy. Buffett says renewals and thepercentage of quotes resulting in sales were each up.

“I rub my eyes when I look at what [Geico CEO Tony Nicely hasaccomplished],” Buffett says. “Much more growth lies ahead.”

At other insurance operations, Berkshire Hathaway ReinsuranceGroup, led by Ajit Jain, reversed a $714 million underwriting lossin 2011 to a profit of $304 million in 2012. And General Re morethan doubled yearly underwriting profit to $355 million from $144million in 2011.

Results at General Re included $266 million of catastrophelosses from Sandy, an earthquake in Northern Italy and tornadoes inthe U.S. Midwest.