Berkshire Hathaway, the Warren Buffett-run holding firm and conglomerate, has reported a 66% year-on-year rise in web underwriting earnings for its insurance coverage and reinsurance companies in 2024 to $9.02 billion.
2024 was one other sturdy 12 months for Berkshire’s re/insurance coverage operations because the underwriting efficiency of its Berkshire Hathaway Reinsurance Group and GEICO greater than offset a lower within the major insurance coverage section.
The improved underwriting outcome comes regardless of estimated claims from Hurricanes Helene and Milton of $1.2 billion throughout the agency’s re/insurance coverage companies.
Berkshire’s Q1 2025 outcomes will embody losses associated to the January wildfires in Los Angeles, however the agency has revealed at this time that it at present estimates that its insurance coverage group might incur pre-tax losses of roughly $1.3 billion from the occasion.
Turning to the 2024 outcomes, the corporate’s reinsurance arm delivered web underwriting earnings of $2.7 billion in 2024, up from the prior 12 months’s $1.9 billion, pushed by a 9% year-on-year enchancment within the property and casualty (P&C) outcome to $3.8 billion, partially offset by a decline to $223 million in life and well being.
Retroactive reinsurance got here in decrease for 2024 at -$846 million, as did periodic cost annuity at -$597 million, in contrast with -$1.5 billion and -$650 million in 2023, respectively.
P&C premiums written fell 2.1% year-on-year to $21.9 billion, attributable to decrease property volumes, partly offset by typically increased charges, new enterprise, and elevated participations in sure casualty strains. Premiums earned elevated 1.4% to $22.2 billion for 2024.
Loss and loss adjustment bills decreased 3.3% year-on-year to $12.2 billion, with losses incurred from important disaster occasions of $800 million in 2024, down from $900 million in 2023. Berkshire explains that estimated final liabilities for losses occurring in prior accident years have been diminished $1.7 billion in 2024, largely attributable to lower-than-expected losses within the property line of enterprise.
Considerably offsetting the decrease loss ratio of 55.1%, P&C reinsurance underwriting bills elevated barely with a ratio of 27.8% in contrast with 26.3% in 2023. The P&C mixed ratio strengthened to 82.9% for 2024 from 84% in 2023.
In L&H reinsurance, premiums written have been flat at $5 billion in 2024, and premiums earned fell barely to $4.99 billion, which Berkshire explains included a discount of $161 million attributable to the commutations of a number of U.S. life contracts in Q1 2023.
The section’s underwriting earnings decreased $131 million year-on-year to $4.8 billion in 2024, together with beneficial properties from life contract commutations of $53 million for the 12 months.
Berkshire Hathaway Main Group, the corporate’s major insurance coverage provider, recorded pre-tax underwriting earnings of $855 million in 2024, down on 2023’s $1.4 billion, as loss and loss adjustment bills elevated by $1.4 billion year-on-year to $12.7 billion.
Berkshire explains, “Losses incurred included reductions of estimated final losses for prior accident years’ claims of $52 million in 2024 and $537 million in 2023. The comparative decline mirrored a major enhance in loss estimates at GUARD and decrease reductions in estimated losses throughout a number of of our different companies that write medical skilled legal responsibility and business legal responsibility coverages, partially offset by elevated reductions of property loss estimates. Throughout 2024, attributable to deteriorating loss expertise, administration at GUARD carried out a complete assessment of claims and considerably elevated estimated final declare liabilities.”
Premiums written on the major insurance coverage arm elevated to $18.8 billion from $18.1 billion in 2023, primarily attributable to will increase at NICO Main, BH Direct and BHHC, partially offset by a 16.3% discount at GUARD. Premiums earned rose to $18.7 billion in 2024 from $17.1 billion in 2023.
At GEICO, a author of property and casualty insurance policies, primarily personal passenger vehicle insurance coverage, pre-tax underwriting earnings swelled to $7.8 billion in 2024 from $3.6 billion in 2023, pushed by increased common premiums per auto coverage, decrease claims frequencies, and improved working efficiencies.
Premiums written elevated $3.1 billion to $42.9 billion, and premiums earned elevated to $42.2 billion from $39.2 billion.
Loss and loss adjustment bills decreased 4.7% year-on-year for GEICO to $30.3 billion, which incorporates $360 million of losses associated to Hurricanes Helen and Milton. Additional, reductions within the final loss estimates for prior accident years’ claims have been $550 million in 2024 in comparison with $1.5 billion in 2023.
Throughout the companies, insurance coverage funding revenue elevated to $13.7 billion in 2024 from $9.6 billion in 2023.
On a consolidated foundation, Berkshire’s float has grown from roughly $129 billion on the finish of 2019 to round $171 billion on the finish of 2024.
In his annual letter to shareholders, Buffett commented on the insurance coverage and reinsurance companies.
“Our insurance coverage enterprise additionally delivered a serious enhance in earnings, led by the efficiency of GEICO. In 5 years, Todd Combs has reshaped GEICO in a serious means, rising effectivity and bringing underwriting practices updated. GEICO was a long-held gem that wanted main repolishing, and Todd has labored tirelessly in getting the job finished. Although not but full, the 2024 enchancment was spectacular.
“On the whole, property-casualty (“P/C”) insurance coverage pricing strengthened throughout 2024, reflecting a serious enhance in injury from convective storms. Local weather change might have been asserting its arrival. Nevertheless, no “monster” occasion occurred throughout 2024. Sometime, any day, a very staggering insurance coverage loss will happen – and there’s no assure that there will probably be just one every year.”
