Berkshire Hathaway Inc. reported third-quarter net income more than quadrupled compared to last year's catastrophe-scarred period.
The parent company of Geico and General Reinsurance Co. reported net income of $2.8 billion compared with $586 million for the same period last year.
The Omaha, Neb.-based conglomerate, founded by Warren Buffett, reported an underwriting profit of $917 million compared with a loss of $1.2 billion in the same period a year ago.
The company also reported insurance investment income of $759 million for the quarter, compared with $601 million last year.
While saying the results were “obviously very satisfactory,” the company added, “Our insurance business has benefited in a major way from the absence of catastrophe losses. This is not due to managerial brilliance but good luck. Last year we got clobbered with a spate of hurricanes, more of which we will likely see in the future.”
The company also noted that Geico “is leading the pack with growth far above its peers.”
Morgan Stanley analyst William Wilt said in an analyst's note that with television advertising becoming an ever more critical element in gathering market share, Geico's blanketing the airwaves with its ubiquitous lizard has been effective in gathering new customers.
“Here again, caution makes sense. The industry's profitability is sure to decline next year–substantially, in all probability–and Berkshire's insurers will not be immune from industry trends,” he said.
However, Berkshire said the company expects its insurance results will outpace the industry “and that our long-term advantage could be significant.”
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