Berkshire Hathaway has reported third-quarter net earnings dropped 48.5 percent to $586 million, or $381 per share, with nearly $3 billion in hurricane losses for its insurance operations causing the decline.
In last year's third quarter, net earnings totaled $1.1 billion, or $739 per share, the company reported Friday.
In total, estimates of losses from Hurricanes Katrina and Rita recorded in the third quarter were $2.99 billion, with $2.3 billion recorded for the Berkshire Hathaway Reinsurance Group operations, $602 million for General Re, and $118 million for GEICO.
Pre-tax underwriting losses for Berkshire Hathaway Reinsurance Group of $1.6 billion and additional underwriting losses at General Re totaling $389 million more than offset a $237 million underwriting gain at GEICO, bringing total underwriting losses to $1.8 billion for the insurance and reinsurance operations in total for the quarter.
Berkshire Hathaway Reinsurance Group writes excess-of-loss and quota-share reinsurance worldwide, including catastrophe excess-of-loss reinsurance, as well as retroactive reinsurance and multi-line reinsurance. The catastrophe excess business, with underwriting losses of $1.5 billion, was the largest contributor to underwriting losses overall, the company said.
Last year, the reinsurance operations also posted storm-driven underwriting losses of just over $500 million for Berkshire Re and Gen Re together. That result pushed overall pre-tax underwriting losses for the group to $326 million in third-quarter 2004.
For Berkshire's insurance and reinsurance operations overall, after-tax underwriting losses were nearly $1.2 billion, compared to a $215 million underwriting loss recorded in third-quarter 2004.
After-tax investment income from insurance operations eased the sting of underwriting losses somewhat, coming in at just over $600 million in third-quarter 2005, up 24 percent from last year's third-quarter.
Through nine months, investment income of $1.6 billion more than offset after-tax underwriting losses of $475 million.
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