Berkshire Hathaway P&C reinsurance underwriting profit surpasses $1bn in Q1 2024

Berkshire Hathaway, the Warren Buffett-run holding company and conglomerate, has surpassed $1 billion in underwriting earnings in its property and casualty (P&C) reinsurance operations during the first-quarter of 2024, up almost 160% year-on-year.

With P&C reinsurance premiums written rising by nearly 3%, to $6.455 billion for the three month period, driven by net increases in new business written and increased participations and retention elsewhere.

A 10.7% decline in loss ratio made for a far more profitable quarter for this business unit of Berkshire Hathaway’s re/insurance operations.

A year ago, Berkshire Hathway’s P&C reinsurance units generated pre-tax underwriting earnings of $390 million, so the $1.008 billion earned in Q1 2024 eclipsed the prior-year quarter.

In fact, notably that figure has eclipsed all first-quarter underwriting earnings for P&C reinsurance that Berkshire Hathaway has reported in more than five years and could actually be its best ever result for that business unit in this quarter.

Premiums earned across the P&C reinsurance units, which comprise National Indemnity Company (NICO), General Re and TransRe, rose 5.6% year-on year to $5.435 billion.

The loss and loss adjustment expense ratio on these P&C reinsurance premiums was just 55.1%, a meaningful improvement on the previous year’s 65.8%.

Including expenses, the Berkshire Hathaway P&C reinsurance combined ratio fell 11 points year-on-year to 81.5% for Q1.

For Berkshire to register what it terms a catastrophe loss it needs to result in pre-tax incurred losses exceeding $150 million and for Q1 2024 the company said no major catastrophes affected the company, recording zero in cat losses, down from $400 million in the previous year’s Q1 period.

On the life and health reinsurance side, Berkshire Hathaway recorded premium growth to $1.231 billion, but with a higher benefit and expense ratio the underwriting profit fell slightly, from $137 million for Q1 2023, down to $108 million for Q1 2024.

Overall underwriting profit for the Berkshire Hathaway Reinsurance Group came out at $912 million for Q1 2024, up 295% on the previous year’s $231 million.

On the primary insurance side, Berkshire Hathaway’s primary insurance group, which includes the earnings of Berkshire Hathaway Specialty Insurance Company, recorded $468 million in underwriting profits for Q1 2024, up 81% on the $268 million of the prior year.

Again, a lower loss and loss adjustment expense ratio was the main driver, alongside 8% higher premiums written for the quarter.

Berkshire Hathaway’s motor insurer GEICO was again a significant profit driver for the company in the last quarter, with a 7% increase in premiums written to nearly $10.8 billion and a 10.5 point decrease in loss ratio compared to Q1 of 2023.

Pre-tax net investment income across Berkshire Hathaway’s insurance and reinsurance businesses rose by an impressive 32.2% to $3.152 billion for the first-quarter of 2024, driving net investment income of $2.598 billion which was also up 32% year-on-year.

The all-important insurance investment float sat at $168 billion at the end of Q1 2024, slightly down from $169 billion at the end of Q4 2023.

Also read about Berkshire Hathaway’s 2023, after which it reported net underwriting earnings across its re/insurance operations of $5.4 billion for the full year.

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