Berkshire Hathaway announces Q1 2012 insurance unit profit doubling

Warren BuffetThe company made this announcement in preparation for the annual meeting with Chairman Warren Buffet.

Berkshire Hathaway Inc. has announced its first quarter profit as having doubled following derivative bets and insurance units that performed significantly better than anticipated.

The company’s net income rose to $3.25 billion, which means $1,966 per share. In 2011 at the same time, it reported an income of $1.51 billion, which was $917 per share. The lower numbers last year were blamed on the losses from the claims made following the Japan earthquake and Tsunami.

At the meeting, Warren Buffet took questions from journalists, analysts, and investors.

Buffet used the opportunity, as he does every year, to give somewhat of a lecture regarding capital deployment as well as the economy as a whole. Buffet had a larger amount of funds available to him during this year’s first quarter as natural disasters did not create the same level of loss to insurance units as was seen last year.

Aside from tornado activity, this year’s first quarter did not see the same degree of catastrophe losses.

This year, the Class A shares from Berkshire Hathaway increased by 6.3 percent, which fell behind the S&P 500’s gain of 8.9 percent. The company’s book value (which is its measure after its liabilities are subtracted from its assets) was $164.9 billion at the end of last year, but by the completion of the first quarter this year, it was $176 billion.

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The equity portfolio value also climbed this year from where it had been on December 31, 2011, at $77 billion, to $89.1 billion at the end of March 2012, with the rallying of Munich Re, International Business Machines Corp., American Express Co., and Wells Fargo & Co. According to the company’s regulatory filing, in terms of equities spending, Berkshire had $3.4 billion and it sold $820 million within the first quarter. It also stated that it purchased $2.1 billion in fixed-maturity securities and it sold $1.1 billion from among its assets.

Buffet, 81 years old, hired Ted Weschler and Todd Combs, former hedge fund managers, within the last two years for assisting with the overseeing of investments. He has been under some pressure to show that Berkshire is ready for a leadership transition and that succession plans have been made.

 

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