Berkshire Hathaway, the US insurance and investment firm controlled by veteran entrepreneur Warren Buffett, has reported a solid set of results for FY2005. Despite the investment business gaining on the back of the Gillett-Procter & Gamble merger, the insurance operations suffered from hurricane losses.

Q4 profits at Berkshire Hathaway were up by some 54% on the back of a one-off gain pertaining to the P&G-Gillette tie-up, while Berkshire’s full year earnings grew by 17% to reach $8.53 billion.

However the Omaha, Nebraska-based group’s insurance operation proved a blot on an otherwise rosy outlook, losing $3.4 billion in the 2005 hurricane season according to the Financial Times. Berkshire is set to increase the cost of hurricane and other catastrophe cover in the wake of these losses, with Mr Buffett admitting that it is an open question whether climate change would make the occurrence of such storms more frequent.

We’ve concluded that we should now write mega-cat policies only at prices far higher than prevailed last year – and then only with an aggregate exposure that would not cause us distress if shifts in some important variable produce far more costly storms in the near future, Mr Buffett told shareholders in a letter.