Warren Buffett’s company plans to release its second-quarter earnings report Friday afternoon. Looking more closely at Berkshire’s insurance operations, three of the firm’s four insurance lines-Geico, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group-posted earned premium growth during the quarter.
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Berkshire’s investments and derivatives added $123 million this quarter, compared to last year’s $2.06 billion.
Berkshire traded most of its Graham stock for Miami-based telvision station WPLG, some Berkshire stock and cash.
Operating earnings came to $3.89 billion in the second quarter, down from $4.33 billion a year ago. While those operating businesses provide a steady stream of earnings, the company’s results can still fluctuate widely depending on the performance of investments and insurance underwriting.
Berkshire’s book value, a measure of net worth, rose 2.4% to $149,735 per Class A share for the first six months of the year.
Over the past five decades, Buffett has built Berkshire into a sprawling operation and amassed one of the best investing records in history.
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Buffett’s company said that third-quarter results will include a pretax gain of about $7 billion tied to the merger that formed Kraft Heinz Co.in July. The annual revenue of the combined entity is expected to be over $27 billion.
Andy Kilpatrick, who wrote “Of Permanent Value: The Story of Warren Buffett”, said the Kraft deal will make up for the rough second-quarter results.
Meanwhile, a Berkshire business that insures against major catastrophes suffered a US$411 million pretax underwriting loss, reflecting currency fluctuations and a storm loss in Australia. His reinsurance business, a main source of funding for the company, is facing increased competition.
The company’s utility subsidiary, Berkshire Hathaway Energy, generated $502 million net income, up from $375 million previous year.
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Berkshire Class A shares closed down $187.24 at $215,462.76, and its Class B shares rose 20 cents to $143.55 on Friday’s close of trade. GEICO WEAKENS Earnings from insurance, Berkshire’s best-known operating sector, fell 39 per cent to $939 million, and included a $38 million underwriting loss versus a year-earlier $411 million profit. The utility unit was helped by last year’s acquisition of Canadian power transmission company Altalink and by higher electricity rates in Iowa.
