Berkshire: Negative Q3 Insurance Results Due to Catastrophe, Auto Losses

Berkshire Hathaway’s insurance business recorded an after-tax underwriting loss of $962 million (a pre-tax loss of $1.15 billion) in the third quarter, a decrease of $178 million from 2021, as catastrophe losses and increases in private-passenger auto frequency offset underlying results.

Overall, Warren Buffett’s conglomerate on Saturday posted a $2.69 billion third-quarter loss compared to a net income of over $10 billion during the same time in 2021.

Insurance segments Geico, Berkshire Hathaway Primary Group, and Berkshire Hathaway Reinsurance Group each recorded pre-tax underwriting losses of $759 million, $281 million, and $110 million respectively. Berkshire logged $3.4 billion in pre-tax losses from Hurricane Ian in Q3 ($2.7 billion after tax) as well as $2.2 billion in losses from Hurricane Ida and flood in Europe ($1.7 billion after tax).

After-tax insurance investment income increased $247 million to $1.4 billion compared to Q3 2021.

The pre-tax Q3 loss attributed to auto insurer Geico worsened from a loss of $289 in Q3 2021. Results reflected “increased claims severities, primarily due to significant cost inflation in property and physical damage claims,” Berkshire said.

“Increases in used car prices are producing increased claims severities on total losses and shortages of car parts are contributing to elevated claims severities on partial losses. In addition, injury claims severities continue to trend higher,” the company added in its earnings filing. Losses and loss-adjustment expenses increased about 12% to $1 billion in Q3. Underwriting expenses for Q3 decreased $355 million as the company reduced advertising costs and lowered employee-related costs.

Premiums written at Berkshire Hathaway Primary Group increased $389 million in Q3. However, losses and expenses increased to nearly $3.8 billion in Q3 from about $3 billion a year ago during the same period. This included $660 million in losses from Hurricane Ian and $740 million and $260 million, largely from Hurricane Ida.

Topics Catastrophe Auto Profit Loss