Warren Buffett’s Old Testament approach to risk is no match for Mother Nature
Seattle — The insurance business has been good to Warren Buffett. For decades, his stable of carriers at Berkshire Hathaway have provided him with billions of dollars to invest. They have also turned an underwriting profit every year since 2002. That streak could be coming to an end. On Friday, Berkshire is likely to report big claims costs during the third quarter at its insurance subsidiaries because of natural disasters including hurricanes Harvey and Irma. Any red ink will add to the challenges at the conglomerate’s largest segment, which already posted an underwriting loss in the first half. "Obviously, this quarter is going to be a loss" on underwriting, said John Fox, the chief investment officer at Fenimore Asset Management, which oversees about $2.5bn including Berkshire shares. "How big that is, I don’t know at this point. I’m counting on a few billion." For years, Buffett has gloated to shareholders about the company’s lucrative insurance subsidiaries like Geico and Berks...
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