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NEW YORK - Warren Buffett's Berkshire Hathaway on Thursday said fourth-quarter operating profit surged 56 per cent, helped by gains in insurance operations a year after it paid out billions in hurricane claims.
Earnings for the Omaha, Nebraska,-based insurance and investment company rose to US$2.87 billion ($4.2 billion), or US$1,859 per Class A share, from US$1.84 billion, or US$1,196, a year earlier. Revenue rose 3 per cent to US$26.23 billion.
Analysts on average expected US$1,401 per share according to Reuters Estimates.
Net income, including investment gains and losses, fell 30 per cent to US$3.58 billion, or US$2,323 per share, largely because of a big year-earlier gain from Procter & Gamble Co.'s purchase of Gillette Co., a large Berkshire holding.
Full-year profit rose 29 per cent to US$11.02 billion, or US$7,144 per share, while operating profit surged 86 per cent to US$9.31 billion, or US$6,036 per share.
Following a difficult 2005 storm season that included Hurricane Katrina, Berkshire raised premiums amid fears of more storms, and as many rivals cut back on underwriting. But the 2006 hurricane season proved docile, lowering insurance payouts.
"Our most important business, insurance, benefited from a large dose of luck: Mother Nature, bless her heart, went on vacation," Buffett wrote in his annual letter to Berkshire shareholders.
Known as the Oracle of Omaha, Buffett has transformed Berkshire since 1965 from a failing textile company into a US$164 billion conglomerate by buying out-of-favour companies with strong management and businesses, and investing in stocks.
Berkshire Class A shares closed Thursday up US$410 at US$106,600 on the New York Stock Exchange and its Class B shares rose US$31 to US$3,554.
The Class A shares have risen 23 per cent in the last year, compared with gains of 9 per cent in both the Standard & Poor's 500 and S&P Insurance indexes.
- REUTERS
