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Berkshire profits soar in 2006


OMAHA, Neb.--Berkshire Hathaway Inc.'s pretax underwriting profits from its insurance operations will deteriorate from 2006's $3.84 billion but still remain satisfactory in 2007, said Chairman Warren E. Buffett in the company's 2006 annual report.

In comparison, pretax underwriting profits for Berkshire's insurance operations, which include General Reinsurance Corp. and Berkshire Hathaway Reinsurance Group, totaled $53 million in 2005, according to the company's annual report released Thursday.

The Berkshire Hathaway Group reported a $1.66 billion underwriting gain for 2006, compared with a $1.07 billion underwriting loss for 2005, which reflected $2.5 billion in losses for hurricanes Katrina, Rita and Wilma. Gen Re reported a $526 million underwriting gain in 2006, compared with a $334 million loss in 2005.

The company's insurance operations, which also include personal lines insurer GEICO and Berkshire Hathaway Primary Group, generated pretax earnings, including investment income, of $8.15 billion in 2006, a 130.8% increase.

For this year, "The big unknown is super-cat insurance" and whether the 2004-05 hurricanes were aberrations or a "first warning" that this century's climate will differ materially from that in the past, said Mr. Buffet in his annual letter to investors in the report.

Despite this possibility, however, said Mr. Buffet, "We remain prepared to lose $6 billion in a single event if we had been paid appropriately for assuming that risk."