Berkshire profit surges as insurance, other businesses gain

Lloyd Doyle
August 6, 2018

Profit at United States tycoon Warren Buffett's firm Berkshire Hathaway surged 67 per cent in the second quarter as its insurance business made a strong turnaround.

Operating profit in the second quarter rose to $6.89 billion from $4.12 billion a year earlier.

In May, the company posted a rare $1.1 billion first-quarter loss, largely due to an accounting change that required it to report unrealized gains or losses in stock investments as net income.

The firm beat Wall Street forecasts, with net profits for the first half of the year up 31pc to $10.9bn (£8.4bn), according to accounts filed yesterday.

Berkshire also ended June with $111.1 billion of cash and equivalents, some of which Buffett could use to repurchase stock under a new policy giving him and Vice Chairman Charlie Munger more freedom to conduct buybacks as big acquisitions have been hard to find.

Berkshire's biggest stock holding is Apple Inc., which this week became the first US -listed company to surpass $1 trillion in stock-market value.

Apple's share price at that time suggests that Berkshire may have bought roughly 15 million additional shares in the second quarter, on top of the 239.6 million it already owned.

Berkshire operates businesses in the insurance, utility, manufacturing and railroad sectors in addition to its vast investment portfolio.

Buffett says that rule distorts net results and can mislead investors. That's up from $4.1 billion, or about $1.67 per B share, a year ago.

That lead many to speculate Berkshire may soon join the stock buyback bonanza corporate America has engaged in lately.

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Class A shares of Berkshire closed Friday at $304,671, or 7 percent below their January 29 peak, while Class B shares closed at $200.24, or 8 percent below its peak on the same day.

Highlights from Berkshire's latest earnings include a major upswing in its insurance business.

Insurance underwriting profit totalled $US943 million, compared with a year earlier $US22 million loss.

BNSF railroad added $1.3 billion to Berkshire's profit, up from $958million a year ago.

Other reports by Iphone Fresh

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