10-Q/APeriod: Q3 FY2001

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

Filed March 15, 2002For Securities:BRK-BBRK-A

Summary

This filing is an amendment to Berkshire Hathaway's third-quarter 10-Q report for the period ending September 30, 2001. The primary purpose of the amendment is to restate the financial statements to reflect a change in accounting for Berkadia LLC. Previously accounted for using the equity method, Berkadia is now consolidated, which increased assets and liabilities of the finance and financial products businesses by approximately $5.5 billion, though it had no impact on reported interim earnings or shareholders' equity. The report details significant underwriting losses in the insurance segment, primarily due to the September 11th terrorist attacks, which resulted in an estimated pre-tax charge of $2.275 billion. Despite these losses, the company's strong balance sheet and diverse business operations are highlighted.

Key Highlights

  • 1Restatement of Q3 2001 financials due to change in accounting for Berkadia LLC from equity method to consolidation, increasing assets and liabilities by $5.5 billion without impacting earnings or equity.
  • 2Significant pre-tax underwriting losses of $2.275 billion recorded in the reinsurance businesses related to the September 11, 2001 terrorist attacks.
  • 3GEICO reported an underwriting gain of $130 million for Q3 2001, driven by lower loss ratios and reduced expenses, despite a slight decrease in policies-in-force.
  • 4General Re experienced substantial underwriting losses, particularly in its North American property/casualty segment, heavily impacted by the September 11th attacks and unfavorable reserve adjustments.
  • 5Non-insurance businesses saw significant revenue growth due to recent acquisitions, though some were adversely affected by the general economic slowdown and the September 11th attacks.
  • 6Policyholder float increased to $33.3 billion at September 30, 2001, largely due to reserves set aside for September 11th losses.
  • 7Berkshire Hathaway completed several significant acquisitions during the first nine months of 2001, including Shaw Industries, Johns Manville, MiTek Inc., and XTRA Corporation, deploying approximately $4.8 billion in cash.

Frequently Asked Questions

The primary reason for filing this amendment was to restate the interim financial statements for the quarter ended September 30, 2001. Berkshire Hathaway changed its accounting method for its interest in Berkadia LLC from the equity method to consolidation, which required restating the financial statements to reflect this change.

The September 11th terrorist attacks had a significant negative impact, primarily on Berkshire's reinsurance businesses. The company recorded an estimated pre-tax charge of approximately $2.275 billion for these losses. This resulted in substantial underwriting losses, particularly for General Re and the Berkshire Hathaway Reinsurance Group.

Berkshire Hathaway's financial condition remains strong, characterized by significant liquidity and a robust capital base. Shareholders' equity was $57 billion at September 30, 2001. Consolidated cash and invested assets, excluding those of finance and financial products businesses, totaled approximately $69 billion. The company also deployed significant capital for acquisitions during the period.

Yes, Berkshire Hathaway completed four significant business acquisitions during the first nine months of 2001, including Shaw Industries, Johns Manville, MiTek Inc., and XTRA Corporation, with an aggregate cash consideration of $4.8 billion. The report also mentions the agreement to acquire Fruit of the Loom's apparel business, expected to close in early 2002.