Berkshire Hathaway pulls-back on property reinsurance writings in Q2 2024

Having made a big and successful bet on property catastrophe risks in 2023 that saw the company writing significantly more in property reinsurance premiums in the first-half of 2023, Warren Buffett’s Berkshire Hathaway has taken a different stance in the second-quarter of 2024.

Berkshire Hathaway’s P&C reinsurance businesses reduced their property reinsurance writings in the last quarter, resulting in a reduction in underwriting volumes for the period.

Berkshire Hathaway reported its quarterly results on Saturday and revealed that premiums written across the P&C reinsurance businesses declined 5.4% in the second quarter and 1.1% in the first six months of 2024 compared to the prior year.

The company said this reduction was, “primarily due to reductions of property volumes,” without giving any reason for this pull-back.

We can of course speculate that one driver will have been the significant hurricane numbers in seasonal forecasts for the 2024 Atlantic season, something we’d already seen some evidence of in Berkshire’s Florida appetite this year.

As we reported a few weeks ago, Berkshire Hathaway, as a named participant, was conspicuously absent from the 2024 reinsurance tower of Florida Citizens after its mid-year renewal.

The company had taken a $1 billion line in the Florida Citizens reinsurance renewal for 2023, but opted not to deploy a significant amount of capital to it this year.

Berkshire Hathaway is still present, via its subsidiary TransRe which took almost $78.8 million of the tower this year. In 2023, TransRe had written an almost $29.3 million line of the Citizens renewal, alongside Berkshire Hathaway’s giant $1 billion line.

The absence of Berkshire Hathaway from the Citizens program will have been part of the 5.4% reduction in P&C reinsurance premiums underwritten, but not all of it.

But, with property cited as the area behind much of the reduction, Berkshire’s property cat appetite certainly appears suppressed, or at least much more tightly risk managed, in 2024.

As we had reported in February, the 2023 bet on property catastrophe risks paid off, but Berkshire Hathaway was also acutely aware of the significant property catastrophe risk it had added to the business, with its reinsurance chief Ajit Jain having acknowleded the firm’s property catastrophe reinsurance book was “very unbalanced” and still significantly exposed to Florida hurricanes.

For 2024, the bet on Florida and property catastrophe exposure in general now seems much reduced, year-on-year. Depending on how hurricane season pans out, that may prove a wise move for the company.

Berkshire Hathaway reported an 82% year-on-year rise in net underwriting earnings across its insurance and reinsurance businesses for the second quarter of 2024, as its property and casualty (P&C) reinsurance operation again generated more than $1 billion in underwriting profit. Read more on Berkshire’s results over at Reinsurance News.