Warren Buffett's Berkshire Hathaway has reported a third-quarter profit fall of 77 percent, the fourth straight quarterly decline, hurt by weaker results from insurance underwriting and a big loss on derivatives contracts.
Net income for the Omaha, Nebraska-based insurance and investment company fell to US$1.06 billion (NZ$1.83 billion), or US$682 for an A share, from US$4.55 billion, or US$2942 a share, a year earlier.
Operating profit fell 18 percent to US$2.07 billion, or US$1335 a share, from US$2.56 billion, or US$1655.
It fell short of analysts' average expectation of US$1429 a share. Revenue fell 7 percent to US$27.93 billion.
Buffett, an economic adviser to president-elect Barack Obama, has committed more than US$27 billion of Berkshire's money this year to make acquisitions, finance takeovers and invest in blue-chip companies such as General Electric and Goldman Sachs Group as the credit crisis drives asset values down and makes it harder to borrow.
The investments give Berkshire new ways to grow as insurance operations, which generate about half its business, come under pressure. Last month, Buffett pledged to move all his personal holdings apart from Berkshire stock, which is pledged to charity, into United States stocks from government bonds, citing long- term optimism in corporate America.
Profit from insurance underwriting fell 83 percent to US$81 million, hurt by increased price competition and about US$1.05 billion of losses tied to Hurricanes Gustav and Ike. Berkshire had boosted insurance premiums after Hurricane Katrina in 2005, but prices and profit margins have since fallen.
Insurance investment income declined 12 percent in the quarter to US$809 million, and profit from other businesses declined 8 percent to US$1.08 billion. Berkshire also had US$1.01 billion of net losses from investments and derivatives.
The company has disclosed many derivative contracts tied to the performance of the Standard & Poor's 500 and three foreign stock indexes, and to the credit quality of high-yield bonds. Accounting rules require Berkshire to regularly report unrealised gains and losses on those contracts.
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