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Buffett's Berkshire doubles profit, repurchases $900 million stock

  • Published at 10:55 pm November 4th, 2018
web-Warren Buffett
Warren Buffett, CEO of Berkshire Hathaway Inc REUTERS

Insurance underwriting income was $441 million in the third quarter, compared to a loss of $1.4 billion in the year-ago period

Berkshire Hathaway Inc, the conglomerate run by billionaire Warren Buffett, on Saturday said its quarterly operating profit doubled as its insurance business dodged hurricanes and benefited from lower taxes.

The strong result gives Buffett more cash to deploy even as the well-known bargain-hunting “value” investor has admitted struggling to find a place to put those earnings to work and resorted to buying back $928 million in his own company’s stock in the latest quarter.

Operating profit in the third quarter doubled to $6.88 billion from $3.44 billion a year earlier, and higher than the $6.11 billion expected by Wall Street, according to IBES data from Refinitiv.

Helping the company’s insurance operations were lower estimated liabilities from property and casualty insurance in prior years and lower taxes. The year prior included major losses due to three US hurricanes and an earthquake in Mexico.

Insurance underwriting income was $441 million in the third quarter, compared to a loss of $1.4 billion in the year-ago period.

“This is absolutely one of the biggest quarterly earnings reports that has ever come out of a United States corporation,” said Bill Smead, chief executive of Smead Capital Management, a Berkshire shareholder.

Berkshire said third-quarter net income rose more than 355% to $18.5 billion, though that reflected a new accounting rule requiring it to report unrealized investment gains with earnings. Buffett said the rule could lead to “wild and capricious” results and can mislead investors, who should look at operating profit instead.

Berkshire’s effective tax rate for the third quarter was 19.2% compared to 25.3% in the year-ago period following a reduction of the corporate tax rate that President Donald Trump signed into law in December. Many US companies’ reported results have been skewed by the law’s impact.

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