Berkshire Hathaway's full-year net earnings were $11.02bn or $7,144 per share, compared to $8.53bn or $5,538 per share in 2005. Annual revenues rose to $98.54 billion from $81.66 billion last year.
“A confession about our 2006 gain is in order,” said Warren Buffett, chairman of Berkshire Hathaway. “Our most important business, insurance, benefited from a large dose of luck: Mother Nature, bless her heart, went on vacation. After hammering us with hurricanes in 2004 and 2005 – storms that caused us to lose a bundle on super-cat insurance – she just vanished. Last year, the red ink from this activity turned black – very black.”
Buffett pointed out that whilst National Indemnity's recent deal with Equitas to provide up to $13.9bn of retroactive cover did not offer unlimited protection, it did provide "future protection against unpleasant surprises."
"Ajit and I think the odds are in our favor," said Buffett. "And should we be wrong, Berkshire can handle it."
The company's insurance operations, which include GEICO, Gen Re and Berkshire Hathaway Reinsurance Group generated a 130% increase in pretax earnings to $8.15bn in 2006. The group reported a $1.66bn underwriting gain for 2006, compared with a loss of $1.07bn in 2005, due in the most part to hurricanes Katrina, Rita and Wilma. Revenues from the insurance operations were $81.86bn, up from $77.35bn in 2005.
Gen Re reported a $526m underwriting gain in 2006, compared with a loss of $334m the previous year. Gross written premiums were down to $5,949m from $6,155m in 2005.
GEICO reported earnings of $1,314m compared to $1,221m in 2005. The company posted $11,303m in gross written premiums, up from $10,285m the previous year.
The Berkshire Hathaway Reinsurance Group increased its underwriting earnings from a loss of $1,069m in 2005 to a gain of $1,658m in 2006, again mainly attributable to losses stemming from hurricanes Katrina, Rita and Wilma.
