Canadian Underwriter

Hurricane Matthew ‘will not be material’ to Berkshire Hathaway’s financial results

November 7, 2016   by Canadian Underwriter

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Berkshire Hathaway Inc. reported Friday a 13% drop in its property & casualty premiums earned at its reinsurance group, while the primary insurers had a combined loss ratio of 61% during the third quarter of this year.

For the three months ending Sept. 30, Berkshire Hathaway Reinsurance Group had P&C premiums earned of $1.164 billion, down 13% from $1.341 billion during the same three months of 2015. All figures are in United States dollars.

Omaha, Nebraska-based Berkshire Hathaway writes reinsurance through the Berkshire Hathaway Reinsurance Group as well as through General Reinsurance Corp. Both GenRe and Berkshire Hathaway Specialty Insurance have offices in Toronto.

Total insurance premiums earned at Berkshire Hathaway were $11.36 billion in the latest quarter, up 8% from $10.51 billion in Q3 2015.

Berkshire Hathaway’s primary insurers produced “aggregate pre-tax underwriting gains of $485 million in the first nine months of 2016 and $566 million in 2015,” the firm said in an SEC filing. “Combined loss ratios were 61% in the first nine months of 2016 and 59% in 2015. The comparative increase in the loss ratio reflected comparative declines in favorable loss development of prior years’ loss events, partly offset by lower loss ratios on current year business.”

In addition to Berkshire Hathaway Specialty, which writes commercial P&C, Berkshire Hathaway’s primary insurers include National Indemnity Company.

Berkshire Hathaway also owns U.S. direct auto writer Government Employees Insurance Company (GEICO).

“Premiums earned in the first nine months of 2016 were $4.58 billion, an increase of 16.0% compared to 2015,” Berkshire Hathaway stated of is primary group. “The increase in premiums was primarily attributable to volume increases from BH Specialty, MedPro Group, BHHC and GUARD. The BH Primary insurers produced aggregate pre-tax underwriting gains of $485 million in the first nine months of 2016 and $566 million in 2015.”

Total insurance group revenues for Q3 2016 were $12.407 billion, of which $6.47 billion was from GEICO, $1.389 billion was from GenRe, $1.872 billion was from Berkshire Hathaway Reinsurance Group and $1.043 billion was from the primary group.

“In the first nine months of 2016, we had no significant catastrophe losses,” the firm stated. “Based on preliminary estimates, we believe that losses arising from Hurricane Matthew in October 2016 will not be material.”

At GenRe, P&C premiums earned dropped 6%, from $683 million in Q3 2015 to $643 million in the latest quarter.

Total GenRe premiums earned – including life and health – were $1.389 billion in Q3 2016, compared to $1.405 billion during the same period of 2015.

For the first three months of 2016, Berkshire Hathway’s total revenues from insurance were $43.9 billion, up from $47.4 billion for the first nine months of 2015. Berkshire Hathaway’s total revenues were $59.1 billion during the first nine months of the year, of which $10.33 billion was from railroad, utilities and energy while $4.83 billion was from finance and financial products.