Reinsurance prospects ’have turned for the worse’: Warren Buffett

Sell, money, cash

Berkshire Hathaway has cut its stake in Munich Re again as billionaire founder Warren Buffett questions the profitability of reinsurance.

Berkshire’s stake was cut to 4.6% from 9.7%, according to a filing at the end of last week.

The stake was originally 12%, but that was cut to 9.7% in October.

In May, Buffett voiced negative views of reinsurance at Berkshire’s annual shareholder meeting.

“The reinsurance business is not as good as it was,” he said. “It’s a business whose prospects have turned for the worse and there’s not much we can do about it.”

Munich Re’s latest financial results showed that the firm’s Q3 profit fell 29% due to a slump in investment income.

Net profit was €520m ($567.8m) for the period, compared to €733m ($800.4m) in Q3 2014.

Munich Re’s reinsurance operations made €379m in profit, down from €533m in Q3 2014.

Group gross written premium (GWP) was up 3.6% in the period to €12.5bn, compared with €12.1bn in the same period of 2014.

At the time, Munich Re chief financial officer Jörg Schneider said: “The capital market turbulences have left their mark on the investment result, with below-average realised gains on disposals, write-downs of equities, and losses from derivative hedging instruments.”