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Berkshire Q1 Income Doubles; Losses in Insurance Units Drop.

Byline: Chad Hemenway,

NU Online News Service, May 7, 10:42 a.m. EDT

Warren Buffett's Berkshire Hathaway more than doubled first-quarter-net income as its insurance businesses turned in a net-underwriting profit of $54 million compared to a loss of $821 million a year ago.

Overall first-quarter net income was $3.25 billion compared to $1.51 billion during the same period in 2011.

The Omaha, Neb.-based company also benefitted from gains in its derivatives portfolio--from $176 million in the first quarter last year to $650 million in 2012.

Leading the improvement inBerkshire's insurance operations was General Re and Berkshire Hathaway Reinsurance Group (BHRG). General Re posts a first-quarter-underwriting profit of $81 million compared to a loss of $326 million.

BHRG reports a significant reduction in first-quarter-underwriting losses: $191 million compared to $1.34 billion after the first three months last year.

Berkshiresays it did not have any significant catastrophe events in the first quarter. Last year, Berkshire recorded pre-tax-catastrophe losses of $1.7 billion from events like earthquakes inJapanandNew Zealandand flooding inAustralia.

GEICO,Berkshire's direct private passenger automobile insurer, reports a decrease in first-quarter-underwriting income to $124 million from $337 million last year.

Premiums earned at GEICO increased 9.3 percent to more than $4 billion. However, losses and loss-adjustment expenses during the first quarter increased 10.6 percent to $2.93 billion versus the same period in 2011 due to higher injury and physical-damage severities.

Property and casualty premiums earned in the first quarter at the General Re unit were up nearly 3 percent to $735 million.

"Price competition in most property and casualty lines persists," saysBerkshirein a filing with the U.S. Securities Exchange Commission. "Our underwriters continue to exercise discipline by not accepting offers to write business where prices are deemed inadequate."

Premiums earned at BHRG declined $55 million, or 29 percent, during the first quarter, but losses from catastrophes were much less than in 2011. The company says it has "generally constrained the volume of business written in recent years as premium rates have not been attractive enough to warrant increasing volume."
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Publication:Property and Casualty 360
Article Type:Financial report
Date:May 7, 2012
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