Berkshire underwriting profit falls

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8 March 2010

US investment group Berkshire Hathaway has recorded a significant rise in total earned premiums from its insurance and reinsurance operations during 2009, but saw its underwriting profit plunge.

The giant investment company, which owns major motor insurer Geico, reinsurer General Re and life reinsurer NRG, recorded total earned premiums of $US27.9 billion ($30.69 billion), up from $US25.5 billion ($28.05) in 2008. But underwriting profit slipped from $US2.8 billion ($3.08 billion) in 2008 to $US1.6 billion ($1.76 billion).

Chairman Warren Buffett says in a letter to shareholders that he takes the blame for a $US6.3 million ($6.93 million) loss at Geico, where a plan to break into the credit card market failed.

“Geico’s managers, it should be emphasised, were never enthusiastic about my idea,” he said. “They warned me that instead of getting the cream of Gico’s customers we would get the… well, let’s just call it the non-cream.”

The group posted a net profit of $US8.08 billion ($8.89 billion), up from $US4.9 billion ($5.3 billion) in 2008, mainly thanks to rising returns from investments and derivatives. Revenue rose 4% to $US112.49 billion ($123.78 billion).