NEW YORK – Berkshire Hathaway Inc. (BRK.A, BRK.B), the wide-ranging conglomerate run by billionaire investor Warren Buffett (search), posted sharply lower quarterly profit Friday as its reinsurance operations paid out large claims from Florida's hurricanes in August and September.
Despite the losses, Buffett said Berkshire's insurance operations were performing well, while his company now has $38 billion in cash and equivalents and holds $20 billion in currency hedges, chiefly against the dollar.
Berkshire, whose interests range from insurance to carpets to private jet rental, reported third-quarter profit of $1.137 billion, or $739 a share. That compares with $1.806 billion, or $1,176 a share, a year earlier.
Profit was decimated by the hurricanes that hit the Southeastern United States and Caribbean, which cost Berkshire about $816 million after tax. Berkshire Hathaway Reinsurance Group (search), which specializes in big-ticket catastrophe cover, took the bulk of the losses as it paid out claims to insurers hurt by the storms. Berkshire's General Re unit also took large losses.
Results from Berkshire's non-insurance businesses fell after a $255 million charge for writing off mineral facilities owned by its MidAmerican Energy Holdings (search) unit.
Berkshire's grocery delivery unit McLane Co., which it bought in 2003 from Wal-Mart Stores Inc. (WMT), posted lower profit for the quarter, as did Berkshire's Shaw Industries carpet and floorings unit.
Excluding one-time gains from investments, Berkshire reported quarterly profit of $402 a share. That was less than half the $881 a share it earned in the year ago quarter, and below the $622 a share expected by the only Wall Street analyst who forecasts Berkshire's results, according to Reuters Estimates.
Buffett, the world's second-richest person behind Bill Gates (search), with an estimated $43 billion fortune according to Forbes magazine, also gave some details of his company's widely followed investments.
He said Berkshire's cash on hand now topped $38 billion, up from $31 billion a year ago, partly due to large sales of U.S. government and high-yield corporate debt, known as junk bonds, over 2003 and 2004.
Berkshire also said it had foreign exchange forward contracts involving eight currencies worth about $20 billion at the end of the quarter. Buffett has said previously he has built up a large position against the U.S. dollar, which this week hit all-time lows against the euro.