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Buffett calls Sokol events inexcusable

ROUGH WITh THE SMOOTH:Berkshire is likely to post its first full-year loss in insurance underwriting in nine years, following losses from earthquakes in Japan and New Zealand

Reuters, OMAHA, nebraska

At the outset of the meeting, Buffett said losses from earthquakes in Japan and New Zealand and other catastrophes had driven Berkshire’s first-quarter profit down about 58 percent.

Preliminary results indicate that net earnings fell to US$1.51 billion from US$3.63 billion a year ago.

Operating earnings fell 28 percent to US$1.59 billion from US$2.22 billion, with improvement in “pretty much all” of Berkshire’s roughly 80 other businesses, other than those linked to residential housing, Buffett said.

Losses totaled US$1.07 billion from the Japan earthquake and US$412 million from the New Zealand earthquake.

Buffett said Berkshire would this year likely post its first full-year loss in insurance underwriting in nine years.

The company relies on insurance businesses as a low-cost funding source for investments because it receives premiums well before it pays out money to cover insurance losses. Such losses can effectively raise funding costs.

Buffett rejected calls by some investors for Berkshire to pay a dividend, saying it was better to invest Berkshire’s cash hoard, which totaled US$38.23 billion at year end.

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