Berkshire Hathaway Reports Strong Q2 2022 P&C Reinsurance Result

Berkshire Hathaway Reports Strong Q2 2022 P&C Reinsurance Result

In Q2 2022, Warren Buffett’s holding firm and conglomerate Berkshire Hathaway experienced yet another highly profitable quarter in its P&C reinsurance division, which helped enhance underwriting results throughout the whole insurance operation.

In total, Berkshire Hathaway produced an insurance and reinsurance underwriting result of $581 million in the second quarter of 2022, an increase of about 55% over the same period in the previous year.

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However, GEICO, Warren Buffett’s vehicle subsidiary, lost $487 million as a result of higher claim severities, which were principally brought on by major cost inflation in the automotive industry.

The main insurance division of Berkshire Hathaway performed better this year, increasing underwriting earnings from $166 million to $242 million.

Berkshire Hathaway Reports Strong Q2 2022 P&C Reinsurance Result

The star of the results for Berkshire Hathaway’s re/insurance company, however, was the property and casualty reinsurance division, which includes General Re (GenRe) and National Indemnity (NICO).

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Pre-tax underwriting profits for P&C reinsurance jumped from $202 million to $976 million for the second quarter of 2022.

Following a strong first quarter in which Berkshire Hathaway’s P&C reinsurance company generated pre-tax underwriting profits of $405 million, the first half of 2022 saw underwriting earnings of $1.381 billion, over a billion dollars higher than the same period the previous year.

In the more competitive market conditions, Warren Buffett’s P&C reinsurance company is booming, and his other businesses are continuing to capitalize on this to grow rapidly.

Due to this rapid expansion, the P&C reinsurance business underwrote premiums worth $733 million, a 21.4 percent increase from the previous year.

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According to the company, Berkshire Hathaway’s P&C reinsurance division took advantage of market conditions to expand in the property lines segment, with net new business serving as one of the key contributors to premium growth.

Berkshire Hathaway Reports Strong Q2 2022 P&C Reinsurance Result

Meanwhile, Berkshire Hathaway said that its P&C reinsurance losses and loss adjustment expenses reduced $229 million, or 10%, over the prior year, despite some significant worldwide disaster loss occurrences that the business was affected by, such as the Australian and South African floods.

The Berkshire Hathaway P&C reinsurance combined ratio as a result, which engine continues to propel the Berkshire re/insurance business, was just 72.4 percent for Q2 and 80.1 percent for the first half of 2022.

Major catastrophe-related losses were $443 million in Q2 2022 and $758 million in H1.

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However, decreases in the expected ultimate liability for significant losses that occurred in earlier years of $437 million in the second quarter and $574 million in the first six months benefited the Berkshire Hathaway P&C reinsurance business.

Life and health reinsurance, on the other hand, recovered from a loss in the first quarter to post positive earnings of $75 million in the second quarter.

While premiums are largely unchanged year over year, declining COVID pandemic-related effects appear to be aiding Berkshire Hathaway’s life and health business in recovering.

The Berkshire Hathaway conglomerate announced a staggering net loss of -$43.76 billion overall and attributable to its shareholders, as the macro-effects of financial market volatility drove valuation falls and investment and derivative losses struck the company.

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However, operating earnings across the board for the company were high, rising from the previous year’s roughly $6.7 billion to almost $9.3 billion.

Berkshire Hathaway Reports Strong Q2 2022 P&C Reinsurance Result

Finally, an interesting point to note from the results is that Berkshire Hathaway’s investment float declined for the first quarter we can remember.

This figure tends to increase steadily, driven by insurance and reinsurance premium float.

But at the end of Q2 2022 the insurance related investment float is reported at $147 billion, the same as it was at the end of 2021.

That’s a billion dollar decline on the $148 billion reported at the end of Q1 this year, as the macro-environment knocked this figure for the first time in a while.

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