10-QPeriod: Q3 FY2000

BERKSHIRE HATHAWAY INC Quarterly Report for Q3 Ended Sep 30, 2000

Filed November 13, 2000For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. reported strong net earnings of $2.24 billion for the first nine months of 2000, a significant increase from $1.53 billion in the same period of 1999. This growth was driven by substantial realized investment gains, which more than doubled to $2.36 billion, and robust performance in non-insurance businesses. The insurance segment, while showing increased premiums, experienced underwriting losses, particularly within General Re and GEICO, due to rising claim costs and prior period reserve developments. However, investment income from the insurance segment remained a strong contributor. The company also made significant strategic acquisitions during the period, including MidAmerican Energy Holdings Company, and announced further substantial acquisitions like Shaw Industries and Benjamin Moore & Co., indicating a continued focus on strategic growth and diversification.

Key Highlights

  • 1Net earnings increased to $2.24 billion for the first nine months of 2000, up from $1.53 billion in the prior year.
  • 2Realized investment gains more than doubled to $2.36 billion for the nine-month period, significantly boosting overall profitability.
  • 3Non-insurance businesses showed strong revenue and earnings growth, with a substantial portion attributed to recent acquisitions.
  • 4Insurance segment premiums earned increased, but underwriting results deteriorated, primarily due to higher losses and loss adjustment expenses at GEICO and General Re.
  • 5The company made significant investments in MidAmerican Energy Holdings Company and announced major pending acquisitions of Shaw Industries and Benjamin Moore & Co.
  • 6Shareholders' equity grew to $59.4 billion, reflecting retained earnings and overall financial strength.
  • 7Insurance float increased to $27.1 billion, providing substantial funds for investment.

Frequently Asked Questions

The significant increase in net earnings was primarily driven by a substantial rise in realized investment gains, which more than doubled to $2.36 billion for the period. Additionally, strong performance from the non-insurance businesses, including contributions from recent acquisitions, also played a key role.

The insurance segment saw an increase in premiums earned, but underwriting results declined. This was largely due to higher losses and loss adjustment expenses, particularly at GEICO and General Re. Factors contributing to this included rising claim costs, increased frequency and severity of claims, and adverse development of prior period reserves. Despite underwriting challenges, the investment income from insurance operations remained a strong positive contributor.

Berkshire Hathaway made significant investments in MidAmerican Energy Holdings Company during the period. Furthermore, the company announced major pending acquisitions of Shaw Industries for approximately $2 billion and Benjamin Moore & Co. for approximately $1 billion, expected to close in early 2001. These moves indicate a continued strategy of diversification and growth through acquisitions.

Berkshire Hathaway's balance sheet remains strong with over $75 billion in consolidated cash and invested assets (excluding finance businesses) as of September 30, 2000. The company's insurance float, representing funds temporarily held for policyholders, increased to $27.1 billion, providing substantial capital for investment. The company expects to fund its upcoming major acquisitions from internally generated funds.