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Berkshire Q2 profit more than doubles as GEICO underwriting income drops
GEICO said bodily injury severity is rising and its underwriting income fell 45.4% to US$994 million, while Allstate improved its combined ratio to 86.6%.
Berkshire Hathaway reported second-quarter net earnings of US$25.7 billion, more than double the US$12.4 billion a year earlier, though the company warned that US$12.7 billion of that increase came from investment gains that do not reflect underlying operating performance. Operating earnings rose to US$13.0 billion from US$11.2 billion, setting up a closer look at insurance results under similar industry cost pressures.
In personal auto, GEICO delivered a sharp decline in underwriting income, which fell 45.4% year over year to US$994 million. GEICO’s combined ratio worsened 7.7 percentage points to 91.2% as its loss ratio climbed to 76.6%, with bodily injury claims frequency up 5% to 7% and bodily injury claims severity running 10% to 12% higher.
Allstate, by contrast, improved profitability despite citing the same bodily injury severity pressure. Its property-liability combined ratio improved 4.5 points to 86.6% in the quarter, aided in part by US$1.5 billion in auto reserve releases year to date, roughly half tied to bodily injury claims from accident years 2023 and 2024.
Allstate executives said bodily injury severity remains elevated industry-wide, even as they noted physical damage severities are moderating and the company maintained sufficient pricing margin to absorb inflation without disruptive rate action. Berkshire also reported stronger results elsewhere in insurance, including a 333% jump in Berkshire Hathaway Primary Group pre-tax underwriting earnings to US$273 million and a 8.9% increase in its property and casualty reinsurance group to US$1.14 billion, supported by favorable prior-year reserve development and an absence of major catastrophe losses.