Berkshire Hathaway, the Warren Buffett-run holding company and conglomerate, has reported a 66% year-on-year rise in net underwriting earnings for its insurance and reinsurance businesses in 2024 to $9.02 billion.
2024 was another strong year for Berkshire’s re/insurance operations as the underwriting performance of its Berkshire Hathaway Reinsurance Group and GEICO more than offset a decrease in the primary insurance segment.
The improved underwriting result comes despite estimated claims from Hurricanes Helene and Milton of $1.2 billion across the firm’s re/insurance businesses.
Berkshire’s Q1 2025 results will include losses related to the January wildfires in Los Angeles, but the firm has revealed today that it currently estimates that its insurance group could incur pre-tax losses of approximately $1.3 billion from the event.
Turning to the 2024 results, the company’s reinsurance arm delivered net underwriting earnings of $2.7 billion in 2024, up from the prior year’s $1.9 billion, driven by a 9% year-on-year improvement in the property and casualty (P&C) result to $3.8 billion, partially offset by a decline to $223 million in life and health.
Retroactive reinsurance came in lower for 2024 at -$846 million, as did periodic payment annuity at -$597 million, compared 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 lower property volumes, partly offset by generally higher rates, new business, and increased participations in certain casualty lines. Premiums earned increased 1.4% to $22.2 billion for 2024.
Loss and loss adjustment expenses decreased 3.3% year-on-year to $12.2 billion, with losses incurred from significant catastrophe events of $800 million in 2024, down from $900 million in 2023. Berkshire explains that estimated ultimate liabilities for losses occurring in prior accident years were reduced $1.7 billion in 2024, mostly attributable to lower-than-expected losses in the property line of business.
Somewhat offsetting the lower loss ratio of 55.1%, P&C reinsurance underwriting expenses increased slightly with a ratio of 27.8% compared with 26.3% in 2023. The P&C combined ratio strengthened to 82.9% for 2024 from 84% in 2023.
In L&H reinsurance, premiums written were flat at $5 billion in 2024, and premiums earned fell slightly to $4.99 billion, which Berkshire explains included a reduction of $161 million attributable to the commutations of several U.S. life contracts in Q1 2023.
The segment’s underwriting earnings decreased $131 million year-on-year to $4.8 billion in 2024, including gains from life contract commutations of $53 million for the year.
Berkshire Hathaway Primary Group, the company’s primary insurance carrier, recorded pre-tax underwriting earnings of $855 million in 2024, down on 2023’s $1.4 billion, as loss and loss adjustment expenses increased by $1.4 billion year-on-year to $12.7 billion.
Berkshire explains, “Losses incurred included reductions of estimated ultimate losses for prior accident years’ claims of $52 million in 2024 and $537 million in 2023. The comparative decline reflected a significant increase in loss estimates at GUARD and lower reductions in estimated losses across several of our other businesses that write medical professional liability and commercial liability coverages, partially offset by increased reductions of property loss estimates. During 2024, due to deteriorating loss experience, management at GUARD performed a comprehensive review of claims and significantly increased estimated ultimate claim liabilities.”
Premiums written at the primary insurance arm increased to $18.8 billion from $18.1 billion in 2023, primarily due to increases at NICO Primary, BH Direct and BHHC, partially offset by a 16.3% reduction at GUARD. Premiums earned rose to $18.7 billion in 2024 from $17.1 billion in 2023.
At GEICO, a writer of property and casualty policies, primarily private passenger automobile insurance, pre-tax underwriting earnings swelled to $7.8 billion in 2024 from $3.6 billion in 2023, driven by higher average premiums per auto policy, lower claims frequencies, and improved operating efficiencies.
Premiums written increased $3.1 billion to $42.9 billion, and premiums earned increased to $42.2 billion from $39.2 billion.
Loss and loss adjustment expenses decreased 4.7% year-on-year for GEICO to $30.3 billion, which includes $360 million of losses related to Hurricanes Helen and Milton. Further, reductions in the ultimate loss estimates for prior accident years’ claims were $550 million in 2024 compared to $1.5 billion in 2023.
Across the businesses, insurance investment income increased to $13.7 billion in 2024 from $9.6 billion in 2023.
On a consolidated basis, Berkshire’s float has grown from approximately $129 billion at the end of 2019 to around $171 billion at the end of 2024.
In his annual letter to shareholders, Buffett commented on the insurance and reinsurance businesses.
“Our insurance business also delivered a major increase in earnings, led by the performance of GEICO. In five years, Todd Combs has reshaped GEICO in a major way, increasing efficiency and bringing underwriting practices up to date. GEICO was a long-held gem that needed major repolishing, and Todd has worked tirelessly in getting the job done. Though not yet complete, the 2024 improvement was spectacular.
“In general, property-casualty (“P/C”) insurance pricing strengthened during 2024, reflecting a major increase in damage from convective storms. Climate change may have been announcing its arrival. However, no “monster” event occurred during 2024. Someday, any day, a truly staggering insurance loss will occur – and there is no guarantee that there will be only one per annum.”
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