10-QPeriod: Q1 FY2003

BERKSHIRE HATHAWAY INC Quarterly Report for Q1 Ended Mar 31, 2003

Filed May 12, 2003For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc.'s Q1 2003 report shows robust growth, with net earnings of $1.73 billion, a significant increase from $916 million in the prior year's quarter. This surge was driven by strong performance across its diverse business segments, notably a substantial increase in realized investment gains and improved underwriting results in its insurance operations. Total revenues rose to $11.42 billion from $9.52 billion year-over-year. The insurance segment demonstrated resilience, with higher premiums earned and improved underwriting gains, particularly from GEICO and Berkshire Hathaway Reinsurance Group. Non-insurance businesses also contributed positively, with significant revenue and earnings growth, partly attributable to recent acquisitions such as Fruit of the Loom and Garan. The company maintained a strong balance sheet with over $65 billion in shareholders' equity and substantial liquidity.

Key Highlights

  • 1Net earnings more than doubled to $1.73 billion from $916 million in Q1 2002.
  • 2Total revenues increased by approximately 20% to $11.42 billion from $9.52 billion year-over-year.
  • 3GEICO's premiums earned grew by 16.5% to $1.82 billion, with underwriting gains remaining strong at $105 million.
  • 4The Berkshire Hathaway Reinsurance Group (BHRG) showed significant improvement, with underwriting gains rising to $140 million from a $8 million loss in the prior year.
  • 5Non-insurance businesses revenue grew to $4.62 billion from $4.24 billion, with net earnings contributing $477 million.
  • 6Invested assets in the insurance businesses grew to $80.9 billion, contributing to a higher net investment income of $592 million.
  • 7Consolidated float, a key metric for insurers, increased to approximately $42.5 billion.
  • 8Berkshire Hathaway announced significant acquisition plans, including Clayton Homes and McLane Company, demonstrating continued strategic expansion.

Frequently Asked Questions

The significant increase in net earnings was primarily driven by a substantial rise in realized investment gains, which grew to $811 million from $162 million in the prior year's quarter. Additionally, improved underwriting results from the insurance segment, particularly from GEICO and the Berkshire Hathaway Reinsurance Group, contributed to the overall earnings growth. The non-insurance businesses also showed solid performance, with increased revenues and earnings.

Berkshire's insurance operations demonstrated strong performance. Premiums earned across the insurance group increased to $6.03 billion. GEICO experienced a 16.5% rise in premiums earned and maintained solid underwriting gains. The Berkshire Hathaway Reinsurance Group (BHRG) saw a substantial turnaround, reporting a $140 million underwriting gain compared to a loss in the previous year. Net investment income from the insurance businesses also rose to $592 million due to an increase in invested assets.

The filing notes two significant planned acquisitions: Clayton Homes, Inc., a vertically integrated manufactured housing company, for approximately $1.7 billion, and McLane Company, Inc., a large wholesale distributor, from Wal-Mart Stores, Inc. These strategic moves indicate Berkshire Hathaway's continued pursuit of growth through acquisitions in diverse sectors.

Berkshire Hathaway maintained a strong financial position. Consolidated shareholders' equity grew to $65.4 billion. The company reported significant liquidity, with cash and cash equivalents totaling $19.5 billion across its insurance and finance segments. Consolidated borrowings were managed, with a slight decrease in total debt.