Berkshire 2017 Q1 reporting is out

[John Hjorth]

Berkshire 2017 1st quarter report is out now. Cartoon figures as always, lately ... - Enjoy!

[gfp]

Just got home and checked out the press release.  $14 Billion increase in float in Q1 to 105 Billion.  That's more than I expected.  Mostly the AIG deal, but damn Ajit!

[John Hjorth]

Just got home and checked out the press release.  $14 Billion increase in float in Q1 to 105 Billion.  That's more than I expected.  Mostly the AIG deal, but damn Ajit!

 

I've got the exact same perception - please also look at the cash flow statement and the insurance gross income - I haven't had the time dive into it - It looks almost unbelievable. - Will do tomorrow.

[SlowAppreciation]

Just got home and checked out the press release.  $14 Billion increase in float in Q1 to 105 Billion.  That's more than I expected.  Mostly the AIG deal, but damn Ajit!

 

I've got the exact same perception - please also look at the cash flow statement and the insurance gross income - I haven't had the time dive into it - It looks almost unbelievable. - Will do tomorrow.

 

Wow, reserved an additional ~$17b against future losses.

[racemize]

The AIG deal has losses up to 20 billion for a $10 billion price tag, so I could see a pretty large reserve happening.

[SlowAppreciation]

The AIG deal has losses up to 20 billion for a $10 billion price tag, so I could see a pretty large reserve happening.

 

Must have a very positive excepted value.

 

Do you mind sharing your sources for info on the deal?

[John Hjorth]

... Do you mind sharing your sources for info on the deal?

 

It's described on p.17 in the 2017 Q1 Report, including the accounting treatment in detail. So the AIG deal also explains the jump in insurance premiums in the quarter.

[gfp]

As telegraphed by Warren earlier this year, GEICO is absolutely killing it on gaining new business.  They are being very aggressive on pricing, sacrificing a lot of short-term profitability to get these new customers.  They believe in their ability to keep them over time as they adjust their rates to earn a suitable profit.

 

I have insured all of our vehicles except motorcycles through USAA since I was 15 years old  (motos are insured at GEICO).  USAA is of course a wonderful company and in many ways it is the company GEICO was originally modeled after - it is a direct, mutual company.  We receive multi-policy discounts on other property business with USAA that keep me from switching, but I recently got a quote from GEICO on an apples-to-apples comparison of coverages on just our cars and trucks.  GEICO was significantly less expensive than USAA for our Louisiana auto policies, and USAA knows our complete claims history through my learning permit (not a single claim).  Ultimately we won't switch because of thousands of dollars of discounts elsewhere through USAA, but I do believe GEICO is purposefully raising rates much less than they believe their competitors will, sacrificing near-term profit, and buying that big growth we saw this quarter.  I think it's a good strategy.

 

 

[as an aside, in addition to all these large screen smartphones everyone seems to be holding while they drive, one of the biggest factors in auto claims lately has been all these sensors and cameras in the body panels that tend to be damaged in even minor accidents - mirrors, bumpers, fenders - there are sensors and cameras all over new vehicles and the cost of those replacement body panels is multiples higher than a simple stamped fender or bumper and a quick re-spray.  That trend will only continue until AI keeps our vehicles from ever touching - in the distant future]