10-QPeriod: Q3 FY2001

BERKSHIRE HATHAWAY INC Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 14, 2001For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. (BRK-B) reported its third-quarter and nine-month results for the period ending September 30, 2001. The company experienced a significant net loss of $679 million in the third quarter, primarily due to a substantial pre-tax charge of $2.275 billion related to estimated losses from the September 11, 2001 terrorist attacks. For the first nine months of the year, net earnings were $700 million, a sharp decline from $2.244 billion in the same period of 2000. Despite the net loss in the quarter, the company's non-insurance businesses showed strong revenue growth, driven by recent acquisitions, with revenues increasing by over 100% for both the quarter and nine-month period. However, the insurance segment, particularly General Re, incurred substantial underwriting losses. The company's financial condition remains robust, with shareholders' equity at $57 billion and significant cash and invested assets. Berkshire also continued its acquisition strategy, deploying approximately $4.8 billion in cash for business acquisitions during the first nine months of 2001.

Key Highlights

  • 1Significant third-quarter net loss of $679 million, largely driven by $2.275 billion in pre-tax charges related to the September 11th terrorist attacks on Berkshire's reinsurance businesses.
  • 2Nine-month net earnings significantly decreased to $700 million from $2.244 billion in the prior year, primarily due to the impact of the September 11th events.
  • 3Non-insurance businesses demonstrated robust revenue growth, with Q3 revenues up 103.3% and nine-month revenues up 101.7% year-over-year, largely due to recent acquisitions like Shaw Industries and Johns Manville.
  • 4Insurance underwriting operations, particularly General Re, incurred substantial losses. General Re reported a pre-tax underwriting loss of $1.9 billion in Q3 related to the September 11th attacks.
  • 5Policyholder float grew to $33.3 billion as of September 30, 2001, with a notable increase in the third quarter due to reserves set for September 11th losses.
  • 6Berkshire continued its aggressive acquisition strategy, investing approximately $4.8 billion in cash for business acquisitions during the first nine months of 2001.
  • 7The company's financial position remains strong, with $57 billion in shareholders' equity and substantial cash and invested assets, excluding finance and financial products businesses.

Frequently Asked Questions

The primary driver of the net loss in the third quarter of 2001 was the significant pre-tax charge of approximately $2.275 billion attributed to estimated losses from the September 11, 2001 terrorist attacks, impacting Berkshire's reinsurance businesses, particularly General Re.

Underwriting results were significantly impacted by the September 11th terrorist attacks. General Re reported substantial underwriting losses, including $1.9 billion in gross losses from the event. While GEICO showed a net underwriting gain for the quarter, the overall insurance group experienced a net underwriting loss of $1.55 billion in the third quarter.

Berkshire's non-insurance businesses demonstrated strong revenue growth, exceeding 100% for both the quarter and nine months, driven by recent acquisitions. Despite some businesses being affected by the general economic slowdown and the September 11th attack, management considered most of these businesses to have performed well under challenging conditions.

Berkshire's financial position remains strong, with shareholders' equity at $57 billion. The company deployed $4.8 billion in cash for acquisitions in the first nine months of 2001, indicating continued growth through strategic M&A. While these acquisitions boosted revenues significantly, they also contributed to goodwill amortization, though a change in accounting standards is expected to impact future reporting.