Berkshire Hathaway reported a 62 percent spike in second-quarter net income as reinsurance premiums made up for other lines that did not perform as well.
The Omaha-based holding company headed by Warren Buffet earned $2.35 billion in the second quarter, compared with $1.45 billion in the same period last year.
While Geico, Berkshire's auto insurer holding, reported earned premiums rising to $2.7 billion from $2.5 billion in the comparable year-ago period, its underwriting profit dipped significantly to $288 million from $358 million in the same 2005 period.
Morgan Stanley analyst William Wilt has noted that major personal lines auto insurers are currently in a fierce competition for premium dollars, leading them to become among the major advertising groups on television today.
The Berkshire reinsurer, General Re, saw its earned premium decline to $1.49 billion from $1.6 billion in the previous year period. But its underwriting profit more than doubled from $43 million in 2005 to $109 million this quarter as the carrier took advantage of soaring property rates in catastrophe-prone areas.
Net investment income for insurance operations also rose significantly to $1.1 billion from $851 million.
Overall, insurance premiums earned in the quarter rose to $5.8 billion compared with $5.2 billion in the same year-ago period.
Aside from insurance, Berkshire has holdings in utility, energy and other financial services business. Overall, revenues for the entire operation rose 33 percent to $24.2 billion.
Also in the second-quarter interim 10Q report filed by Berkshire with the Securities and Exchange Commission, it was noted that the U.S. Dept. of Justice has targeted former General Re Senior Vice President Christopher Garand in connection with his role in a 2000 finite reinsurance deal with American International Group.
In February the SEC charged Mr. Garand and other General Re executives with helping AIG structure two sham reinsurance transactions that falsely increased AIG's loss reserves in the fourth quarter of 2000 and first quarter of 2001 by a total of $500 million.
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