That branch of Warren Buffett’s company faced significant challenges during this year’s first quarter.
The Berkshire insurance business struck a difficult patch during the first quarter as those units of the company posted an underwriting loss. The losses took the spotlight away from the other gains Berkshire Hathaway brought in through its energy and railroad businesses.
The company’s shareholders meeting took place in Omaha, Nebraska on Saturday. The event was also the location for Berkshire Hathaway’s to take center stage and for Warren Buffett to speak regarding his latest investing wisdom before thousands of listeners. For more than fifty years, Buffet has used his investing forecasts to lead the evolution of Berkshire from a struggling textile company to one of the most powerful financial giants in the world. Its businesses now range from manufacturing to transportation, from retail to energy and, of course, insurance.
The Berkshire insurance business has a history of steady growth and solid decisions.
Buffett is known for his keen eye for thinking long-term. His predictions are often seen as vital guidance regarding acquisitions and stock picks. They have been integral to the increases seen at the company as a whole.
According to Buffett, there were three specific areas in which his predictions were not as accurate as they could have been. He pointed out that this was, in part, due to the volatility of the insurance industry and the results it brings in. A company statement pointed out that there was a 4.8 percent operating profit drop during the first quarter of 2017. This brought it to $3.56 billion.
The outcome of the entire company was dragged down by the General Re unit and reinsurance group’s underwriting losses. Both of those units lost as a result of an Australian cyclone’s associated costs. Geico, it’s auto insurance company, saw a drop in its pretax profit by 34 percent.
That said, the Berkshire insurance business will still more than likely return to a more positive direction as that has consistently been the case after periods of drooping earnings.
