Berkshire Hathaway’s first-quarter profit tumbled 58% from a year ago, as the company took a $1.1 billion pretax hit on last month’s earthquake in Japan.
Berkshire’s (BRKA) net profit dropped to $1.5 billion from $3.6 billion a year ago, the company said Saturday at its annual shareholder meeting. CEO Warren Buffett said Berkshire took $1.7 billion in pretax losses in its big insurance business, as the company reserved for probable claims on quakes in Japan and New Zealand, the Australian floods and a big cyclone.
The losses dragged profits at Berkshire’s insurance unit down almost 90% and put the company on track for its first underwriting loss in nine years, Buffett said. He estimated that the Asian catastrophes will cost the global reinsurance industry – the business of insuring insurers – some $50 billion.
Using Buffett’s preferred method of looking at quarterly numbers – the operating earnings that exclude investment gains and losses and changes in the value of derivatives trades – Berkshire’s profits fell 27% from a year ago, to $1.6 billion.
Buffett said most of Berkshire’s businesses continued to improve in the quarter, notably the Burlington Northern railroad that the company purchased last year. Profits there surged 80%, to $908 million.
But the company’s residential housing related businesses continue to struggle and the insurance losses swamped the gains at the railroad and at its other units.
Buffett told shareholders at the Qwest Center in Omaha that after a brief discussion of the earnings he will turn to the main event, a discussion of the recent resignation of David Sokol.
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