(Reuters) — Warren Buffett's Berkshire Hathaway Inc. said on Friday its second-quarter profit fell 37%, reflecting a significant decline in investment gains and an underwriting loss from insurance operations, which include Geico.

Net income for the Omaha, Nebraska-based insurance and investment company fell to $4.01 billion, or $2,442 per Class A share, from $6.4 billion, or $3,889 per share, a year earlier.

Operating profit dropped well below analysts' forecasts, declining 10% to $3.89 billion, or $2,367 per share, from $4.33 billion, or $2,634 per share, despite improvements at the BNSF railroad and Berkshire Hathaway Energy units.

Analysts on average expected operating profit of about $3,038 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 3% to $51.37 billion. Book value per share, Mr. Buffett's preferred measure of growth, rose 2% from the end of March to $149,735.

Net investment and derivative gains plummeted 94% to $123 million from $2.06 billion a year earlier, when Berkshire shed its 40-year stake in former Washington Post publisher Graham Holdings Co.

The most recent quarter included losses on contracts betting on long-term gains in major stock market indexes.

Accounting rules require Berkshire to report investment and derivative gains and losses with earnings. Mr. Buffett considers the amounts in any given quarter irrelevant, and not reflective of Berkshire's business performance.

Geico weakens

Earnings from insurance, Berkshire's best-known operating sector, fell 39% to $939 million, and included a $38 million underwriting loss versus a year-earlier $411 million profit.

Much of that weakness stemmed from the Geico car insurance unit. Its pretax underwriting gain fell 87% to $53 million, as it paid out more of the premiums it collected to cover losses from accidents. Berkshire is boosting premium rates as a result.

Meanwhile, a Berkshire business that insures against major catastrophes suffered a $411 million pretax underwriting loss, reflecting currency fluctuations and a storm loss in Australia.

Berkshire has been paring back in some insurance areas, particularly reinsurance, as new investors enter the industry, reducing the premiums that Berkshire can charge.

"Everyone is chasing the business," said Jeff Matthews, a principal at the hedge fund Ram Partners.

"Outside of insurance," he added, "things look fine."

Kraft Heinz

Profit from BNSF rose 5% to $963 million as improved operating performance offset lower demand to ship petroleum products, reflecting lower crude oil prices, and fertilizer.

Berkshire Hathaway Energy, a utility mostly owned by Berkshire, saw profit rise 34% to $502 million, helped by higher retail rates and a lower income tax rate.

Berkshire has more than 80 operating businesses in such sectors as insurance, energy, food, industrial products and railroads.

As of June 30 it also owned $117.7 billion of stocks such as Wells Fargo & Co. and The Coca-Cola Co. It bought $3.09 billion of equities in the quarter, without identifying the companies.

The company estimated it will take a $7 billion noncash pretax gain in the third quarter related to its 26.9% stake in Kraft Heinz Co.

Berkshire took that stake in early July after backing the purchase of Kraft Foods Group Inc. by H.J. Heinz Co., which Berkshire and Brazilian private equity firm 3G Capital acquired in 2013.

The stake is worth about $25.5 billion, more than double what Mr. Buffett has said was Berkshire's $9.5 billion investment.

Berkshire has the ability to make more big acquisitions, having ended the quarter with $66.59 billion of cash.

The company also has dozens of smaller businesses that sell, among other things, Benjamin Moore paint, Borsheim's jewelry, Dairy Queen ice cream, Fruit of the Loom underwear, Johns Manville insulation and See's candies.

On Friday, Berkshire Class A shares closed down $187.24 at $215,462.76, and its Class B shares rose 20 cents to $143.55. The shares are about 6% below their record highs set on Dec. 8.