Warren Buffett’s Berkshire Hathaway Inc. reported a 27 percent dip in first-quarter profit, as losses from insurance underwriting reduced the operating results lower than what most analysts had forecast. Analysts had on average forecast an operating profit of about $2,666 per Class A share of Berkshire Hathaway Inc., according to Reuters.
The company had released its results a day prior to its annual meeting, which is the highlight of a weekend of events in Omaha, Nebraska. Last year more than 37,000 shareholders had attended the meeting where Berkshire’s dozens of businesses were showcased. The meeting is keenly watched by thousands of Warren Buffett fans around the world, as he shares his investing gospel at the annual event.
The results were driven by underwriting losses at Berkshire’s namesake reinsurance group and General Re unit, which both incurred losses due to a cyclone in Australia. Also, the pre-tax profits at Geico, which sells auto insurance, fell 34 percent.
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Net income fell to $4.06 billion, or $2,469 per Class A share of the company, from $5.59 billion a year earlier, when Berkshire had gained $1.9 billion by swapping its Procter & Gamble Co stock for Duracell’s battery business. Quarterly operating profits, which exclude investment and derivative gains and losses, fell 5 percent to a three-year low of $3.56 billion, or $2,163 per Class A share of Berkshire Hathaway Inc., from $3.74 billion in the previous year.
Despite the fall in earnings, Buffett’s preferred measure of growth for Berkshire, book value per Class A share, or assets minus liabilities, rose 3.5 percent in the quarter to $178,073. Also, the company ended the quarter with roughly $96.5 billion of cash, equivalents and Treasury bills, a record sum and enough for major acquisitions. Berkshire has more than 90 operating units in insurance, chemical, energy, food and clothing, railroad and other sectors, and also has large investments in stocks of companies such as Apple Inc. and Wells Fargo & Co.