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Buffett's firm says 3Q profit jumps 72 percent

Associated Press Modified: November 2, 2012 at 6:31 pm •  Published: November 2, 2012
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Berkshire's utilities, which include Iowa-based MidAmerican Energy, added $438 million to the company's quarterly profit. That's up from $372 million last year.

But Berkshire's insurance unit, which includes Geico and several large reinsurance companies, were a drag on third quarter profit because last-year's results were helped by a one-time $855 million adjustment in the liabilities of several reinsurance contracts.

Because of that, Berkshire reported an insurance underwriting profit of $392 million this year, down from $1.09 billion last year.

Jeff Matthews, an investor who wrote "Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett," said there were few surprises in the quarterly results, which generally showed Berkshire's businesses moving ahead steadily.

But Matthews said he was surprised not to see any mention of Berkshire insurance liabilities related to Superstorm Sandy that struck the East Coast.

"The thing that jumped out at me was that there was no commentary on the hurricane. That means they have no significant exposure," Matthews said.

Berkshire's operating earnings declined to $3.4 billion from last year's $3.8 billion because the drop in insurance underwriting profits offset the improvement in Berkshire's non-insurance businesses.

Berkshire owns roughly 80 subsidiaries, including railroad, clothing, furniture and jewelry firms, but its insurance and utility businesses typically account for more than half of the company's net income. The Omaha, Neb., company also has major investments in such companies as Coca-Cola Co., IBM and Wells Fargo & Co.

On Friday, Berkshire announced plans to acquire Omaha-based Oriental Trading Co., which offered more than 40,000 party supplies, arts, crafts, toys and other trinkets through its website and catalog.

Oriental Trading generates about $500 million in sales annually and has as many as 2,000 employees, but financial terms for that deal weren't disclosed.

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Berkshire Hathaway Inc.: www.berkshirehathaway.com