Berkshire Hathaway Inc. said Friday that its first-quarter profits rose by more than half, thanks largely to enormous gains in insurance underwriting and investments.
The Omaha-based diversified conglomerate and stock-market investing powerhouse said net income was $4.9 billion, or $2,997 a share, up from $3.2 billion, or $1,966 a share, a year earlier. Revenue rose 15 percent to $44 billion.
Berkshire said the fair value of stock-market investments such as huge stakes in Coca-Cola, IBM, Wells Fargo and American Express rose 11 percent to $97.2 billion, from December.
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The company said in a statement that earnings from insurance underwriting skyrocketed to $901 million, up from $54 million a year earlier. Berkshire owns Geico auto insurance and General Re, which takes risks on major catastrophes, of which there were none.
Underwriting profit happens when the insurers paid out less in claims than they took in from premiums.
Insurance companies also provide Berkshire with enormous sums to invest in stocks and other instruments, because premiums are collected in cash long before they are paid out in losses.
The first-quarter earnings were released after the close of stock market trading Friday and a day ahead of the company's annual shareholders meeting in Omaha.
Investment gains almost doubled to $1.1 billion, led by a $1.25 billion gain from writing equity index puts, or successful bets global stocks would rise.
Earnings in the key Berkshire area rose across the board — insurance underwriting, insurance investments, railroad, utilities and energy, manufacturing, service and retailing, and finance and financial products.
Results in insurance underwriting were led by Berkshire Hathaway Reinsurance Group, which had earnings of $974 million, from a loss a year earlier of $191 million. The insurer of super-catastrophic events is led by Ajit Jain, mentioned by some analysts as a successor to Buffett, 82.
“Our insurance underwriting businesses generated significant underwriting gains in the first quarter of 2013, reflecting no significant losses from catastrophes, and our railroad and utilities and energy businesses continued to generate significant earnings in 2013,” the company wrote in its quarterly report filed with the Securities and Exchange Commission. “Earnings from our manufacturing, service and retailing businesses in 2013 were mixed, but increased about 10 percent in the aggregate.”
Shares of Berkshire closed Friday at a record high of $162,904. The shares have risen 22 percent so far in 2013, versus a 13.2 percent gain in the Standard & Poor's 500.
Underwriting earnings at Geico, the ubiquitous advertiser of auto insurance, more than doubled to $266 million.
At other large Berkshire contributors:
» BNSF Railway earnings rose 14 percent to $798 million.
» Energy company MidAmerican Energy Holdings, operator of two Midwest electric utilities and two natural gas pipelines, had earnings rise 17 percent to $394 million.
» Earnings of the manufacturing, service and retailing group rose 11 percent to $944 million. The group includes diversified industrial company Marmon Group, food wholesaler McLane Co. and retailers such as Nebraska Furniture Mart.
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