Berkshire Hathaway’s P&C reinsurance growth continues

Warren Buffett’s conglomerate and re/insurance company Berkshire Hathaway continued to display an appetite for growth in the second-quarter of the year, lifting its gross property and casualty (P&C) reinsurance premiums written by over 14% during the period.

Berkshire Hathaway’s P&C reinsurance division grew strongly over the last year and a half, as an evident appetite to rebuild a shrunken property reinsurance book, alongside expansion in other P&C specialty and casualty reinsurance lines helped to swell the division.

That growth appetite seemingly persisted through renewals in the second-quarter of 2021, albeit at a slower pace now.

Premiums written rose 14% to $3.446 billion in Q2 2021, up from $2.995 billion in Q2 2020.

Gross premium growth was faster in the second-quarter than the first, as over the six months growth was only 11%.

Premiums earned rose faster, as Buffett’s reinsurance carrier retained more risk, growing by almost 24% in the quarter to $3.354 billion. They also rose by the same percentage across the half-year.

The P&C reinsurance division at Berkshire Hathaway has had a much more profitable first-half compared to 2020, as the loss ratio fell to 69.7% and combined ratio 94.5%.

As a result, Buffett’s P&C reinsurance unit delivered $202 million of underwriting profit for the second-quarter of 2021 and $368 million for the first-half of the year, much better than the prior year’s COVID pandemic and prior year claims development hit losses of -$643 million and -$805 million respectively.

Growth was driven by net new business, increased participation on renewals, improved pricing and favorable foreign currency translation effects, the company said.

Winter Storm Uri accounted for a significant amount of Berkshire Hathaway’s first-half catastrophe losses, at $418 million.

The underwriting side of Warren Buffett’s reinsurance business overall was not profitable though, as underwriting losses plagued Berkshire Hathaway’s life and health reinsurance, retroactive reinsurance and periodic payment annuity arms.

As a result, the Berkshire Hathaway Reinsurance Group fell to an underwriting loss of -$327 million for the second-quarter and -$590 million for the first-half.

But of course, for the Berkshire Hathaway insurance and reinsurance businesses, while underwriting profits are the target, the company also benefits from the accumulation of investable assets gathered through underwriting.

By the end of the first-half of 2021, insurance float accumulated by Berkshire Hathaway had reached $142 billion, up from $138 billion at the end of 2020.