Berkshire pulled in $2.2 billion in premiums on a year that saw no major storms
Berkshire Hathaway’s reinsurance business has retreated back from the catastrophic property damage of the reinsurance market – reported in The Wall Street Journal.
In recent times, Berkshire Hathaway Reinsurance forayed into the business of essence writing insurance for other insurers, that wished to offload some exposure to big losses like hurricane damage. Just a few years ago, Berkshire pulled in $2.2 billion in premiums on a year that saw no major storms.
But recently, Berkshire has become more cash-hit. Its retreat in ‘cat’ reinsurance implies that it has become more risk prone amid a recent downgrade to its credit rating, a series of hits to Berkshire’s bottom line and ongoing turmoil in the economy. Cat policies are risky for insurers, which can be on the hook for billions if a catastrophe like Hurricane Katrina hits.
In 2008, Berkshire Hathaway Reinsurance pulled in $955 million in premiums in catastrophe and individual risk reinsurance, down from $1.6 billion in 2007 and $2.2 billion in 2006.