Berkshire’s GEICO Turns in Strong Q3 but Overall Insurance UW Income Slips

Third quarter underwriting income with Berkshire Hathaway’s insurance insurance units fell about $1.7 billion to $750 million due to estimated losses of about $565 million from Hurricane Helene and increases in losses from prior year claims.

In releasing its earnings Nov. 2, Warren Buffett’s Berkshire Hathaway said it expects pretax losses from Hurricane Milton – which occurred in the fourth quarter – to be between $1.3 billion and $1.5 billion.

Of the company’s three insurance businesses – GEICO, Berkshire Hathaway Primary Group, and Berkshire Hathaway Reinsurance Group – only GEICO turned in a Q3 underwriting profit (about $2 billion compared to about $1 billion for Q3 2023).

For the year as of September 30, the units have recorded underwriting profit of $5.6 billion compared to about $4.6 billion during the same period last year. GEICO has led the way, posting nine-month underwriting profit of $5.7 billion, up 153% from about $2.3 billion in 2023.

Berkshire said GEICO’s Q3 underwriting earnings reflect a $761 million increase in premiums written to about $11.2 billion, primarily attributable to rate increases with an slight offset from a 2.5% decline in policies-in-force.

Berkshire said the rate of decline in policies-in-force for GEICO slowed in the first half of 2024, and grew in Q3 thanks to more new business and stable retention rates.

Loss and loss adjustment expenses at GEICO were about $260 million in Q3 from Hurricane Helene but overall Q3 LAE declined 3.1% to about $7.6 billion. GEICO’s loss ratio in Q3 was 71.4 compared to 80 in Q3 2023.

Berkshire’s Primary Group and Reinsurance Group took Q3 underwriting losses of $689 million and $310 million, respectively. The Primary Group of companies that primarily provide commercial insurance saw Q3 losses and loss adjustment expenses rise 48.8% in Q3 to about $4.1 billion. Claim liabilities from prior years increased $789 million in Q3. Incurred losses from Hurricane Helene was about $80 million.

For Berkshire’s property/casualty companies in its Reinsurance Group, underwriting income was $161 million for Q3, compared to about $1.5 billion a year ago during the same period. Losses and LAE was $364 million in Q3, up 12.5%. Thus far in 2024, losses from significant catastrophe events, including Hurricane Helene, were about $380 million.