Profit falls at Buffett’s Berkshire
Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. on Friday posted its third consecutive profit decline because of slowing returns from insurance.
Second-quarter net income decreased 7.6% to $2.88 billion, or $1,859 a share, from $3.12 billion, or $2,018, a year earlier, the Omaha-based company said. Excluding investment gains, profit was $1,465 a share, beating the $1,352 average estimate of analysts compiled by Bloomberg.
Buffett has been seeking non-U.S. acquisitions and funding buyouts as he scales back sales in some insurance units because of price competition. Last month, he pledged $3 billion to Dow Chemical Co.'s $15.4-billion purchase of Rohm & Haas Co. In April, he agreed to put up $6.5 billion to help Mars Inc. buy Wm. Wrigley Jr. Co. in a deal that gives Berkshire a discounted stake in the chewing gum maker.
Berkshire’s earnings from underwriting insurance and reinsurance policies fell 43% to $360 million. The businesses typically provide about half of Berkshire’s profit.
Commercial insurance rates in the U.S. fell 13% from a year earlier, the Council of Insurance Agents and Brokers said. Reinsurers assume liabilities from insurers for a share of their premiums.
“Increased price competition resulted in fewer opportunities to write business at prices acceptable to Berkshire Hathaway Reinsurance Group,” the company said in a regulatory filing.