Warren Buffett's Berkshire Hathaway reports third-quarter net income quadrupled to $2.77 billion compared with Q3 2005

International
Warren Buffett's Berkshire Hathaway reports third-quarter net income quadrupled to $2.77 billion compared with Q3 2005
By Finfacts Team
Nov 4, 2006, 16:50

Berkshire’s Corporate Performance vs. the Standard & Poor's 500 1965/2005

Printer-friendly page from Finfacts Ireland Business News - Click for the News Main Page - A service of the Finfacts Ireland Business and Finance Portal

Legendary US investor Warren Buffett's Berkshire Hathaway Inc. on Friday reported blowout third-quarter earnings that were boosted by a bet that the US hurricane season would be calmer than anticipated.

Berkshire's third-quarter net income by more than four times to $2.77 billion, or $1,797 a Class A share, compared with $586 million, or $381 a share, in the year-earlier period.

Net income for the first nine months of 2006 was $7.43 billion, or $4,821 a share, compared with $3.40 billion or $2,207 a share in the same period in 2005.

The results put Berkshire's insurance businesses on track to post their best year ever.

Warren Buffett Founder and Chairman commented:

Clearly, these are highly satisfactory 3-month and 9-month earnings for Berkshire. Just as clearly, our insurance business has benefited in a major way from the absence of catastrophe losses. This is due not to managerial brilliance but rather to good luck. Last year, conversely, we got clobbered by a spate of hurricanes, more of which we will surely see in the future.

The property/casualty insurance industry is having an outstanding year, and GEICO is leading the pack with growth far above its peers. 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. We do expect, however, that our insurance results will usually outpace those of the industry and that our long-term advantage could be significant.

Overall, our non-insurance operations are doing well. Particular progress has been made at NetJets, whose year-over-year improvement in pre-tax earnings was $58 million in the third quarter and $119 million for the nine months.

Berkshire's operating earnings totaled $2.6 billion in the third quarter compared with $189 million in the year-earlier period. Operating earnings exclude investment gains from Berkshire's huge stock portfolio. Warren Buffett says that the figures better reflect the trends and health of Berkshire's businesses.

In recent weeks, Berkshire's Class A shares have closed above $100,000 and on Friday, were up $894 a share, or 0.9%, to close at $105,000.