NU Online News Service, May 9, 3:56 p.m. EDT--Berkshire Hathaway Inc. reported higher earnings for its insurance business, but the company's total profit for the first quarter still deteriorated, falling 12 percent to $1.36 billion.
The Omaha, Neb.-based holding company, led by Warren Buffett, saw its overall first quarter income slip from $1.55 billion one year ago. In the latest quarter, Berkshire suffered some $307 million in investment losses from foreign currency trading.
On the positive side, Berkshire saw its underwriting income grow to $319 million, up from $192 million last year. (On a pre-tax basis, it improved to $492 million from $296 million.) Investment income from insurance units also rose, to $554 million from $455 million.
Among individual insurance units, the auto insurer GEICO saw its underwriting income increase to $312 million from $223 on a pre-tax basis. It had $2.4 billion in earned premiums, up from $2.1 billion.
Berkshire described GEICO's first quarter underwriting results as "exceptional" and said that absent large catastrophe losses, GEICO's underwriting results are "expected to be favorable over the remainder of 2005."
One concern, however, is recent rate reductions, which, when fully effective, are expected to cut into underwriting profitability, the company observed.
Berkshire Hathaway Reinsurance Group's underwriting income rose to $143 million from $22 million, while Berkshire Hathaway Primary Group's underwriting income doubled to $18 million from $9 million.
One insurance unit that saw deteriorating results was General Re, whose underwriting income fell to $19 million from $42 million.
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