Net insurance underwriting losses of $828m pushed Berkshire Hathaway’s first-half profits down 12%.

Gross underwriting profits of $496m at motor insurer GEICO and $110m at Berkshire Hathaway Primary Group were not enough to offset the $1.7bn loss from Berkshire Hathaway Reinsurance Group and $194m loss at General Re.

This led to a pre-tax underwriting loss of $1.3bn, partly offset by a $457m income tax credit. The net underwriting loss of $828m compared with an underwriting profit of $688m in the first half of 2010.

Berkshire Hathaway as a whole, which includes utilities, manufacturing and other financial companies as well as insurance, made a first-half 2011 profit of $4.9bn, down from $5.6bn in the first half of 2010.

However, in the second quarter alone, the conglomerate’s profit surged 74% to $3.4bn from $2bn. This was largely because the first-quarter 2010 result was hit by $1.1bn of investment and derivative losses.

Insurance underwriting losses in the second quarter alone were $7m, compared with a profit of $462m in the same period last year.

General Re racked up $630m of catastrophe losses in the first half of 2011 from events that included the New Zealand and Japan earthquakes, Australian floods and US tornadoes.

Berkshire Hathaway Reinsurance Group, which includes National Indemnity, was hit by $1.2bn of catastrophe losses from the earthquakes in Japan and New Zealand - $454m in the ‘catastrophe and individual risks’ segment and $731m in the ‘other multi-line property/casualty’ unit.

Berkshire Hathaway H1 2011 insurance results in $m (compared with H1 2010):

  • Premiums earned: 16,431 (14,290)
  • Investment income: 2,676 (2,802)
  • Pre-tax underwriting result: -1,285 (+1,061)
  • Net underwriting result: -828 (+688)