High insurance premiums give a five-fold boost to Berkshire Hathaway''s Q3 profits

Mumbai: Warren Buffett's Berkshire Hathaway Inc has reported five-fold rise in its third-quarter profit as its insurance operations rebounded after paying out billions of dollars in hurricane claims a year ago.

The insurance and investment firm benefited from mild weather a retreat by competitors in the US Gulf coast.

Third-quarter net income rose to $2.77 billion, or $1,797 a share, from $586 million, or $381, a year earlier, the Omaha, Nebraska-based company said in a regulatory filing. Excluding investment gains, profit rose to $2.6 billion, or $1,687 per share, from $189 million, or $123.

Revenue rose 24 per cent to $25.36 billion, aided by growth in reinsurance business. Expenses were down six per cent at $17.66 billion.

Berkshire ended the quarter with cash profit of $42.25 billion, little changed from June.

Insurance companies in the US suffered heavy losses in the aftermath of hurricanes Katrina and Rita. Insurance losses fell by nearly half to $3.2 billion.

US insurers raised premiums on expectations that this year's hurricanes would be more active, after major storms in the past two years. But, the hurricane season, which lasts until November 30, has proven quiet, causing a fall in insured losses.

Buffett, 76, gets at least half his company's profit from insurance and reinsurance units, including National Indemnity Co, General Re Corp and Geico Corp. During the quarter, claims costs sank 47 per cent to $3.2 billion, while premium revenue rose 10 per cent to $6.36 billion. Interest and dividend income climbed 23 per cent at $1.1 billion.

Berkshire Class A shares closed the week at $105,000, up $894 on the New York Stock Exchange, and its Class B shares rose $28 to $3,501. The Class A shares have risen 18 per cent this year. The Standard & Poor's 500 index is up 9 per cent, and the S&P Insurance Index is up 3 per cent.