Berkshire Hathaway Inc.’s insurance operations pretax earnings increased more than 15-fold in the third quarter to $5.93 billion from $387 million a year earlier.
Its three underwriting segments swung to $2.42 billion in underwriting earnings from $1.07 billion in underwriting losses. Investment income also rose.
Geico posted the greatest improvement, moving to a $1.05 billion pretax earnings from a $759 million loss. Premiums written at Geico rose 2.8% to $10.42 billion.
In October, Geico said it was laying off about 2,000 employees, or 6% of its workforce, as the carrier streamlines processes, according to a letter to associates from Geico Chairman, President and Chief Executive Officer Todd Combs. He cited a business evaluation undertaken during a period of change and rising costs from inflation, delays in parts, repair labor shortages, rising medical costs and more.
The loss ratio improved 17 points to 80 in the third quarter at Geico. The company said it reflected the impact of higher average premiums-per-policy, increased favorable development of prior accident years’ claims estimates and lower frequency, partially offset by increases in average severity.
Insurance earnings for the quarter were helped by what Berkshire Hathaway called relatively low catastrophe losses. In the third-quarter 2022, it incurred estimated post-tax losses of $2.7 billion from Hurricane Ian.
A retrospective adoption of accounting standards has also increased insurance underwriting losses in the third quarter of 2022.
Berkshire Hathaway reinsurance group had a $1.44 billion pretax underwriting income, compared with a $251 million underwriting loss in the third quarter of 2022.
The company jumped back into a hardened property catastrophe reinsurance market this year, taking on disproportionate risk in Florida. Hurricane Idalia was the strongest hurricane to hit the state this year, coming ashore on Aug. 30 with 125 winds, but in the more sparsely populated Big Bend region.
Ajit Jain, Berkshire Hathaway insurance operations vice chairman, earlier said the company could make a $7 billion profit if Florida dodges a major event. The Atlantic hurricane season ends at the close of November.
Berkshire Hathaway primary group recorded a $510 million pretax underwriting gain. A year earlier it had a $281 million underwriting loss.
Berkshire Hathaway Inc.’s consolidated attributable net loss widened to $12.77 billion from a $2.8 billion net loss a year earlier.
Berkshire Hathaway Inc. operating insurance entities currently have a Best’s Financial Strength Rating of A++ (Superior) to A- (Excellent).