Berkshire Insurance Revenue Rose 7.8%

Berkshire Insurance Revenue Rose 7.8%

NU Online News Service, Nov. 10, 11:54 a.m. EST?Berkshire Hathaway Inc., the Omaha, Neb.-based holding company owned by billionaire investor Warren Buffett, posted overall net income of $1.81 billion for the third quarter, up 58 percent from $1.14 billion reported for the period last year.

Berkshire, whose insurance subsidiaries include National Indemnity, GEICO Corp. and GeneralCologne Re, showed improved underwriting profits. The company's underwriting operations earned a combined $258 million for the quarter, in contrast to an underwriting loss of $65 million posted one year ago. For the first nine months of the year, Berkshire had $704 million in underwriting profit, compared with a $64 million loss posted during the same period a year ago.

For the third quarter, insurance investment income dropped slightly to $519 million, from $536 million one year earlier, while for the nine-month period, insurance investment income rose to $1.68 billion from $1.51 billion during the same period last year.

Berkshire's insurance revenue rose to $5.96 billion for the quarter, up 7.8 percent from the same period one year earlier. Among its insurance units, GEICO premium revenue increased 18 percent to $2 billion for the third quarter, while General Re premium revenue fell 3.2 percent to $2.05 billion.

Overall, Berkshire revenue rose 72 percent to $18.2 billion from the $10.6 billion the company reported one year ago. The company attributed the gain to $6.1 billion of revenue from McLane Co., a wholesale distributor of grocery goods Berkshire bought last May.

"Revenues in the third quarter and the first nine months grew abnormally," the company stated, "because of the acquisition of McLane Company, one of the nation's largest wholesale distributors of grocery and nonfood items."

Regarding its insurance operations, Berkshire said the company was helped by a lack of major catastrophe losses in the first three quarters of the year. "There were no major insured catastrophes during the first nine months of 2003," the company said, "and Berkshire's underwriting results benefited from this benign environment."

The GEICO auto insurance unit premium volume increased 15.6 percent for the third quarter and 16.4 percent for the first nine months. But, the company cautioned, GEICO's premium growth will "likely moderate to about 15 percent" for the fourth quarter because of lower rate increases in the auto marketplace.

Meanwhile, Berkshire's non-insurance subsidiaries, which include businesses as diverse as Dairy Queen and Fruit of the Loom, earned $610 million for the third quarter, higher than the $536 million reported by these units one year ago.