Berkshire profit advances 25% to $5bn on insurance rebound

Washington / Bloomberg

Warren Buffett’s Berkshire Hathaway Inc. said second-quarter profit rose 25 percent as results improved at insurance units.
Net income climbed to $5 billion from $4.01 billion a year earlier, the Omaha, Nebraska-based company said in a statement. Operating earnings, which exclude some investment results, were $2,803 a share, missing the average $2,911 estimate of three analysts surveyed by Bloomberg.
Berkshire’s businesses represent a cross-section of the economy and provide Buffett, 85, with a steady stream of cash for more investments. Since the start of the year, he’s added to the company’s manufacturing operations, completing deals for battery-maker Duracell and Precision Castparts Corp., a global supplier to the aerospace industry.
Those businesses have helped bolster results, even as some of Berkshire’s other units face challenges. Its railroad, BNSF, has had to contend with a slowdown in shipments. And its auto insurer Geico has seen an increase in weather-related losses.
Berkshire shares have climbed 10 percent this year to $218,010 at 4 p.m. in New York compared with the 6.8 percent gain in the S&P 500 Index. Results were released after the close of regular trading.
In June, the company’s cash pile got a boost. Kraft Heinz Co. redeemed Berkshire’s preferred shares for about $8.3 billion. The extra funds add to Buffett’s resources for another major acquisition. When he announced the deal for Precision last August, he said the $37 billion takeover would keep him from doing a big transaction for about a year.
Last month, he broke a slow period for dealmaking, announcing an agreement to buy an underwriter of medical professional liability coverage in New York for an undisclosed sum. Meyer Shields, an analyst at Keefe Bruyette & Woods, estimated the price could be around $2.7 billion.
Berkshire has also been adding to its stock portfolio, disclosing in May that it had a $1.07 billion stake in Apple Inc. at the end of the first quarter. The company in June applied for permission to boost its stake in Wells Fargo & Co. after reaching an ownership threshold that requires review by banking regulators.