Having made a giant and profitable guess on property disaster dangers in 2023 that noticed the corporate writing considerably extra in property reinsurance premiums within the first-half of 2023, Warren Buffett’s Berkshire Hathaway has taken a unique stance within the second-quarter of 2024.
Berkshire Hathaway’s P&C reinsurance companies diminished their property reinsurance writings within the final quarter, leading to a discount in underwriting volumes for the interval.
Berkshire Hathaway reported its quarterly outcomes on Saturday and revealed that premiums written throughout the P&C reinsurance companies declined 5.4% within the second quarter and 1.1% within the first six months of 2024 in comparison with the prior yr.
The corporate stated this discount was, “primarily because of reductions of property volumes,” with out giving any motive for this pull-back.
We are able to after all speculate that one driver can have been the numerous hurricane numbers in seasonal forecasts for the 2024 Atlantic season, one thing we’d already seen some proof of in Berkshire’s Florida urge for food this yr.
As we reported a couple of weeks in the past, Berkshire Hathaway, as a named participant, was conspicuously absent from the 2024 reinsurance tower of Florida Citizens after its mid-year renewal.
The corporate had taken a $1 billion line in the Florida Citizens reinsurance renewal for 2023, however opted to not deploy a major quantity of capital to it this yr.
Berkshire Hathaway continues to be current, through its subsidiary TransRe which took virtually $78.8 million of the tower this yr. In 2023, TransRe had written an virtually $29.3 million line of the Residents renewal, alongside Berkshire Hathaway’s large $1 billion line.
The absence of Berkshire Hathaway from the Residents program can have been a part of the 5.4% discount in P&C reinsurance premiums underwritten, however not all of it.
However, with property cited as the realm behind a lot of the discount, Berkshire’s property cat urge for food definitely seems suppressed, or no less than far more tightly threat managed, in 2024.
As we had reported in February, the 2023 bet on property catastrophe risks paid off, however Berkshire Hathaway was additionally aware of the numerous property disaster threat it had added to the enterprise, with its reinsurance chief Ajit Jain having acknowleded the firm’s property catastrophe reinsurance book was “very unbalanced” and still significantly exposed to Florida hurricanes.
For 2024, the guess on Florida and property disaster publicity normally now appears a lot diminished, year-on-year. Relying on how hurricane season pans out, which will show a clever transfer for the corporate.
Berkshire Hathaway reported an 82% year-on-year rise in internet underwriting earnings throughout its insurance coverage and reinsurance companies for the second quarter of 2024, as its property and casualty (P&C) reinsurance operation once more generated greater than $1 billion in underwriting revenue. Read more on Berkshire’s results over at Reinsurance News.
