Profits in US insurer Berkshire Hathaway's third quarter have been virtually halved due to the company's exposure to the season's heavy hurricane expenses.
According to the US insurer, net income fell by 48% to $586 million, from $1.14 billion a year earlier, mainly due to its exposure to the recent devastating hurricane season which, according to current estimates, resulted in approximately $30 to $40 billion worth of damage in total.
Hurricanes Katrina and Rita, the two most damaging events, cost Berkshire $2.99 billion alone and now the company’s insurance subsidiaries have been left with an underwriting loss of $1.17 billion, roughly five times that of the previous year.
As was the case at other significantly affected insurance providers, Berkshire’s reinsurance arm felt the financial impact of the hurricanes the most. According to AFX News, Berkshire Hathaway Reinsurance lost $1.64 billion in the quarter compared to a $463 million loss a year earlier.