Record Q2 profits at Berkshire Hathaway

Berkshire Hathaway has posted record profits for the second quarter tied to a jump in investment gains.

Net profits increased 41 percent to $6.4 billion this quarter, compared with $4.5 billion in the same period of 2013.

The corporation’s overall investment gains jumped to $2.4 billion in the quarter from $492 million in the second quarter of 2013. Much of the investment gains were driven by a $1.1 billion stock and asset swap between Berkshire Hathaway and Graham Holdings in the quarter.

Insurance premiums earned totalled $9.3 billion in the second quarter, compared with $8.8 billion in the same quarter in 2013.

“After-tax earnings from insurance underwriting in the second quarter and first six months of 2014 were less than in the first six months of 2013, due principally to large gains of Berkshire Hathaway Reinsurance Group in the 2013 periods,” according to a company statement.

Net underwriting gain for GEICO, General Re, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group dropped to $411 million in the second quarter of 2014, compared with $530 million in 2013, as a result of catastrophe losses.

Gen Re saw property/casualty premiums earned in the second quarter and first six months of 2014 increase to $64 million and $94 million respectively, compared to 2013. According to the company, this demonstrates disciplined underwriting as underwriters continue to “decline business where prices are deemed inadequate”.

Berkshire Hathaway Reinsurance Group reported premiums earned in the first six months of 2014 from catastrophe and individual risk contracts at $353 million, and said that the company has the capacity and desire to substantially write more business in this area when appropriate pricing can be obtained.

Multi-line property and casualty premiums earned in the second quarter were $705 million and $1,734 million for the first six months of 2014, reflecting declines of $401 million (36 percent) and $694 million (29 percent) versus 2013.

Premiums earned in 2014 with respect to the Swiss Re quota-share contract (which expired at the end of 2012 and is now in run-off) declined $865 million. This decline was partially offset by increased premiums earned from property quota-share contracts.