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Berkshire Hathaway Inc. reported that fourth-quarter earnings more than doubled, partly due to the company’s $1.7 billion pre-tax underwriting profit from insurance operations, because “that’s where the money is at” commented Chairman of the Board Warren Buffett in his famous annual letter to shareholders.
The earnings report, and Buffett’s annual letter, were posted on the Berkshire Hathaway’s Web site on Saturday.
The Omaha, Neb.-based company said in a statement that net income for the quarter was $2.39 billion, or $1,553 a Class A share, up from $1.18 billion, or $772 a share, a year earlier. The most-recent quarter’s results were boosted by a “terrific year” for its insurance business.
Pre-tax underwriting results fared much better in 2003, including a $145 million gain for Gen Re, Berkshire’s former “problem child.” In 2002, Gen Re posted a $1.4 billion pre-tax underwriting loss. Overall 2002 results posted a pre-tax underwriting loss of $398 million.
Buffett said the net worth of Berkshire Hathaway rose by $13.6 billion, increasing the company’s book value per share by 21 percent. He also said that “float” — which Buffett defines as money the company holds but doesn’t own — increased to $44.22 billion from $41.22 billion in 2002.
Buffett also commented in his letter that the company’s capital is underutilized and that the interest the company is earning on its money is “pathetically low.” Overall, the company’s various businesses performed well, which was ultimately guided by its insurance operations. Pretax underwriting results for the company’s insurance lines swung to a profit of a $1.72 billion in 2003 from a loss of $398 million.