Warren Buffett to experience profit cuts thanks to natural disasters this past year

November 5th, 2017  |  Canadian Business

This year’s horrific natural disasters, including Hurricanes Harvey, Irma, and Maria, as well as the earthquakes in Mexico, were detrimental to so many not only physically, but also financially. Many sectors felt the ramifications, even including gas prices across North America. Business that took a huge hit, included those in the insurance sector.

Warren Buffett’s Berkshire Hathaway Inc. is among those who will experience a financial blow. Berkshire, who owns several insurance companies, including Geico and General reinsurance, is expected to see a $1.4 billion insurance underwriting loss. This marks a 43% decline in profit for their third quarter.

The insurance losses brought the Omaha based conglomerate third quarter profits down to $4.07 billion, or about $1.65 per Class B share. This is in contrast to the previous $7.2 billion in profits, which translated to $2.92 per Class B share.

These numbers still put Berkshire above what was expected, as analysts surveyed by FactSet expected them to report operating earnings of $1.59 per Class B share. Meaning, Berkshire came in $0.06 above target.

While Berkshire experienced losses with their insurance companies, their other business reported growth of 2.9% in operating profits. Berkshire owns more than 90 subsidiaries across many sectors, including clothing, furniture, jewelry, and has investments in other major companies, including Coca-Cola and Wells Fargo. Overall, Berkshire still generated $60.53 billion in revenue during the period.