Berkshire Hathaway profit hit by insurance underwriting decline
Warren Buffett’s sprawling Berkshire Hathaway reported a quarterly profit loss on Saturday morning, revealing less income from insurance underwriting.
The Omaha, Nebraska-based conglomerate said its operating profit fell to $6.14 billion in the second quarter, compared to $6.89 billion one year ago — an 11 percent decline. In total, insurance underwriting fell to $353 million from $943 million, a whopping 64 percent plunge.
Berkshire’s net earnings, meanwhile, were $14 billion, or $8,608 per Class A share, from $12 billion, or $7,301 per share, last year.
Its earnings for the first half of the year excluded the beleaguered Kraft Heinz, whose financial statements were not yet available. The company's shares plummeted at the beginning of the year following an SEC probe into its accounting policies. In May, Buffett told FOX Business that he believed Berkshire overpaid in the merger to create Kraft Heinz in 2015.
Berkshire’s financial reach extends to almost every sector of the economy, and it owns a number of marketable, blue-chip stocks that are valued at $170 billion (excluding the company’s shares of Kraft Heinz). Some of those stocks include Apple, Coca-Cola, Goldman Sachs, Southwest Airlines, American Express and General Motors.
The company ended June with about $122 billion of cash and equivalents, up from $112 billion in the first quarter — a record. Despite holding so much cash, "far beyond" the level that Buffett prefers, the company has not made any major acquisitions since 2016 because the asking prices were too high.
Berkshire also said it spent about $2.1 billion in the quarter to repurchase its own stock; last year, the company loosened its policy on stock buybacks in order to help Buffett better deploy the company's cash.