Warren Buffett's Berkshire Hathaway (BRK.A) posted lower quarterly earnings than Wall Street expected as underwriting losses overpowered growth at the conglomerate's Burlington Northern railroad and some manufacturing businesses.
Net earnings at the Omaha, Neb.-based conglomerate dropped 27% in the three months through March to $4.06 billion, or $2,469 a share, Berkshire said in a statement. That lagged behind the $2,705 average of analysts' estimates in a Bloomberg survey, a disappointing kickoff for this weekend's annual investor gala where Berkshire holders can ask questions of the 86-year-old Buffett himself, as well as Vice Chairman Charlie Munger.
In the underwriting portion of Berkshire's insurance business, the company posted a loss of $267 million, compared with profit of $213 million a year earlier as claim payouts and related expenses climbed 16% at auto insurer Geico.
Reinsurer General Re, meanwhile, posted a pre-tax underwriting loss of $143 million after the U.K. changed the way lump-sum personal injury settlements are calculated. That alteration is likely to "significantly increase claim costs associated with currently unsettled cases, as well as for future cases," the company said in a regulatory filing.
Buffett's company reported a 1.2% drop in income from investments through the insurance business, which reached $908 million in the three months through March.
The total value of stock holdings, including Buffett's "Big Four" portfolio of Wells Fargo (WFC) , American Express (AXP) , Coca-Cola (KO) and IBM (IBM) was $133.4 billion as of March 31, compared with $120.5 billion at the end of 2016.
Nicknamed the Oracle of Omaha for his investing acumen, Buffett will likely face shareholder questions Saturday about those holdings, which now include airline stocks to which he was once famously averse.
Among the topics may be Wells Fargo's fake-accounts scandal, which prompted a $185 million settlements with regulators last fall and led to the abrupt departure of its CEO, said Cathy Seifert an analyst with CFRA Research.
Holders may also seek Buffett's insight on public ire about how airlines honor passenger reservations after a doctor suffered injuries while being dragged off a United Airlines flight and a California family with two infants was forced to leave a Delta jet. Buffett holds stock in both.
"Investors should be looking to them for some guidance," Seifert said. "Realistically speaking, these are passive investments that they're making, and investors should assume that they're not going to get commentary on some of the headline risk."
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Berkshire offered holders some good news at Burlington Northern, one of the largest railroads in North America, where profit climbed 6.9% to $838 million as shipments of products used in oil drilling increased amid crude prices nearly twice as high as a year earlier.
Manufacturing revenue, meanwhile, rose 15% to $12.1 billion, reflecting in part a full three months of sales from Precision Castparts, the aerospace-parts supplier Buffett bought for $32.7 billion in 2016.