Berkshire Hathaway (BRK.A; BRK.B) –
Berkshire’s operating results for the third quarter and first
nine months of 2017 and 2016 are summarized in the following
paragraphs. However, we urge investors and reporters to read our
10-Q, which has been posted at www.berkshirehathaway.com. The
limited information that follows in this press release is not
adequate for making an informed investment judgment.
Earnings of Berkshire Hathaway Inc. and its consolidated
subsidiaries for the third quarter and first nine months of 2017
and 2016 are summarized below. Earnings are stated on an after-tax
basis. (Dollar amounts are in millions, except for per share
amounts).
Third
Quarter
First Nine
Months
2017
2016
2017
2016
Net earnings attributable to Berkshire shareholders
$4,067 $7,198
$12,389 $17,788 Net
earnings includes: Investment and derivative gains/losses –
Investments 423 2,050 813 4,809 Derivatives
200
297 457 (216 )
623 2,347 1,270 4,593 Operating earnings
3,444
4,851 11,119
13,195 Net earnings attributable to Berkshire
shareholders
$4,067 $7,198
$12,389 $17,788
Investment and derivative gains/losses per Class A equivalent share
$379 $1,428 $772 $2,794 Operating earnings per Class A equivalent
share
2,094 2,951
6,761 8,028 Net earnings
per Class A equivalent share attributable to Berkshire shareholders
$2,473
$4,379
$7,533
$10,822
Average Class A equivalent shares outstanding
1,644,656 1,643,913 1,644,554 1,643,716
Note: Per share amounts for the
Class B shares are 1/1,500th of those shown for the Class A.
In the table above (which, as noted,
reports after-tax results), we give investment and derivative
gains/losses lines of their own because the amounts of these in any
given quarter or year are usually meaningless.
An analysis of Berkshire’s operating
earnings follows (dollar amounts are in millions).
Third
Quarter
First Nine
Months
2017
2016
2017
2016
Insurance-underwriting $(1,439 ) $272 $(1,728 ) $822
Insurance-investment income 1,044 850 2,917 2,747 Railroad,
utilities and energy 2,005 1,952 4,818 4,431 Other businesses 2,035
2,039 5,649 5,505 Other
(201 )
(262 )
(537 )
(310 ) Operating earnings
$3,444 $4,851
$11,119 $13,195
Operating earnings in the third quarter and first nine months of
2017 are net of pre-tax underwriting losses of approximately $3
billion ($1.95 billion after-tax) attributable to three major
hurricanes (Harvey, Irma and Maria) and an earthquake in
Mexico.
Operating earnings in 2017 are also net of after-tax foreign
currency exchange rate losses of $252 million in the third quarter
and $847 million in the first nine months related to the
revaluation of certain liabilities of Berkshire and its U.S. based
subsidiaries denominated in currencies other than the U.S. dollar.
In 2016, operating earnings included after-tax foreign currency
exchange rate losses of $2 million in the third quarter and gains
of $162 million in the first nine months.
At September 30, 2017, our book value had increased by 8.9%
since yearend 2016 to $187,435 per Class A equivalent share.
Insurance float (the net liabilities we assume under insurance
contracts) at September 30, 2017 was approximately $113 billion, an
increase of approximately $22 billion since yearend 2016.
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures.
The reconciliations of such measures to the most comparable GAAP
figures in accordance with Regulation G are included herein.
Berkshire presents its results in the way it believes will be
most meaningful and useful, as well as most transparent, to the
investing public and others who use Berkshire’s financial
information. That presentation includes the use of certain non-GAAP
financial measures. In addition to the GAAP presentations of net
earnings, Berkshire shows operating earnings defined as net
earnings exclusive of investment and derivative gains/losses.
Although the investment of insurance and reinsurance premiums to
generate investment income and investment gains or losses is an
integral part of Berkshire’s operations, the generation of
investment gains or losses is independent of the insurance
underwriting process. Moreover, under applicable GAAP accounting
requirements, losses can be created as the result of
other-than-temporary declines in value without actual realization
or when certain types of investments are marked-to-market through
earnings. In sum, investment and derivative gains/losses for any
particular period are not indicative of quarterly business
performance.
About Berkshire
Berkshire Hathaway and its subsidiaries engage in diverse
business activities including insurance and reinsurance, utilities
and energy, freight rail transportation, finance, manufacturing,
retailing and services. Common stock of the company is listed on
the New York Stock Exchange, trading symbols BRK.A and BRK.B.
Cautionary Statement
Certain statements contained in this press release are “forward
looking” statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are not guaranties
of future performance and actual results may differ materially from
those forecasted.
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Berkshire Hathaway Inc.Marc D. Hamburg, 402-346-1400
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