Warren Buffett’s Berkshire Hathaway has reported lower insurance underwriting gains for the second quarter, including a 43 percent decline in the property casualty reinsurance underwriting gain to $193mn.
- $104mn Q2 loss for Berkshire Hathaway Reinsurance Group ($297mn gain in Q2 2018)
- P&C reinsurance underwriting gain $193mn, down from $338mn
- Drops in both Berkshire Hathaway Primary Group and Geico underwriting gains
- P&C reinsurance premiums written up 11.4 percent, to $2.33bn
Berkshire’s insurance businesses generated after-tax earnings from underwriting of $353mn in the second quarter, down from $943mn in the same period last year. For the first six months, underwriting earnings were $742mn, down from $1.35bn.
“Earnings from insurance underwriting in 2019 included lower gains from reductions of claim liability estimates for prior years’ property/casualty loss events than in 2018,” Berkshire noted.
Berkshire Hathaway Reinsurance Group reported a $104mn loss in the quarter, compared with a $297mn gain in the same period last year.
The reinsurance group’s P&C pre-tax underwriting gain – which includes results from General Re – was $193mn down from $338mn. However, this was a return to profit after the P&C reinsurance operations made a $40mn loss in the first quarter.
P&C reinsurance premiums written increased 11.4 percent to $2.33bn from $2.09bn. Losses and loss adjustment expenses in the second quarter were up 3.2 percent to $1.46bn. For the first six months they were up 15.3 percent to $3.23bn. The first half of the year included a net increase in estimated ultimate claim liabilities attributable to prior years’ loss events of approximately $269mn compared to a net decrease of $286mn in 2018.
“There were no significant catastrophe loss events affecting our reinsurance operations during the first six months of 2019 or 2018,” Berkshire said.
The retroactive reinsurance underwriting loss was $238mn compared with a loss of $147mn. There were no significant retroactive reinsurance contracts written in the first six months of 2019 or 2018.
The life/health reinsurance operations produced an underwriting loss of $11mn down from $120mn.
Berkshire Hathaway Primary Group made a $167mn underwriting gain in the second quarter, down from $232mn. The primary insurance group’s premiums written were up 12.3 percent in the quarter, to $2.37bn, from $2.11bn.
For the first six months, the primary premiums written were up 10.3 percent to $4.71bn.
“The comparative year-to-date increase was primarily attributable to BH Specialty (23.8 percent) and Guard (23.6 percent), while aggregate premiums written in 2019 by other BH Primary operations were relatively unchanged from 2018,” Berkshire noted.
Geico made a $393mn underwriting gain in the second quarter, down from $673mn. The auto insurer’s premiums written increased 5.7 percent to $8.70bn from $8.23bn. Its losses and loss adjustment expenses in the second quarter of 2019 increased 11.9 percent to $7.3bn.
Insurance investment income increased to $1.37bn, up from $1.14bn.
Berkshire’s overall net earnings attributable to shareholders was $14.07bn, up from $12.01bn in the second quarter of 2018.