Berkshire Hathaway reports $2.7 billion quarterly loss on investment drop
Warren Buffett's company again reported a loss, this time only $2.7 billion, because of a drop in the paper value of its investment portfolio in the third quarter, but most of its operating businesses performed well with the notable exception of Geico.
Berkshire Hathaway reported a quarterly loss Saturday of $2.7 billion, or $1,832 per Class A share. That's down from a $10.3 billion profit, or $6,882 per Class A share, a year ago when the stock market was soaring. In the second quarter of this year, Berkshire reported a $44 billion loss.
Buffett has long said he believes Berkshire's operating earnings are a better measure of the company's performance because they exclude investment gains and losses, which can vary widely quarter to quarter. By that measure, Berkshire's operating earnings jumped 20% to $7.76 billion, or $5,293.83 per Class A share. That's up from $6.47 billion, or $4,330.60 per Class A share. Berkshire said its revenue grew 9% to $76.9 billion. Most of Berkshire's eclectic assortment of more than 90 companies performed well during the quarter, but the key insurance unit of Geico reported a pre-tax underwriting loss of $759 million as the cost of auto claims soared along with the prices of used cars and car parts. Geico has been hampered by soaring costs since the second half of last year.
Geico did increase its rates by 5.4% during the quarter, but that was almost entirely offset because it lost 4.6% of its customers.
Another notable weak spot in the results was that BNSF railroad's profit declined 6% to $1.44 billion as it hauled 5% less freight the cost of fuel soared, and salary costs were adjusted up to reflect the raises railroads have agreed to pay their workers in tentative agreements with their 12 unions. Most of BNSF's peers reported significant increases in profits during the quarter.
Berkshire said its insurance units recorded after tax losses of $2.7 billion related to Hurricane Ian. That compares with $1.7 billion in catastrophic losses a year ago related to Hurricane Ida and major floods in Europe.
Berkshire is sitting on nearly $109 billion cash even though it has been actively investing in the stock market this year, including putting more than $51 billion to work in the first quarter.
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