Berkshire Hathaway 2007 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2007 Berkshire Hathaway annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 78

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78

Below we show the record of our four categories of property/casualty insurance.
Underwriting Profit Yearend Float
(in millions)
Insurance Operations 2007 2006 2007 2006
General Re ....................... $ 555 $ 526 $23,009 $22,827
BH Reinsurance ............... 1,427 1,658 23,692 16,860
GEICO ............................. 1,113 1,314 7,768 7,171
Other Primary................... 279 340* 4,229 4,029*
$3,374 $3,838 $58,698 $50,887
* Includes Applied Underwriters from May 19, 2006.
Regulated Utility Business
Berkshire has an 87.4% (diluted) interest in MidAmerican Energy Holdings, which owns a wide
variety of utility operations. The largest of these are (1) Yorkshire Electricity and Northern Electric, whose
3.8 million electric customers make it the third largest distributor of electricity in the U.K.; (2)
MidAmerican Energy, which serves 720,000 electric customers, primarily in Iowa; (3) Pacific Power and
Rocky Mountain Power, serving about 1.7 million electric customers in six western states; and (4) Kern
River and Northern Natural pipelines, which carry about 8% of the natural gas consumed in the U.S.
Our partners in ownership of MidAmerican are Walter Scott, and its two terrific managers, Dave
Sokol and Greg Abel. It’ s unimportant how many votes each party has; we make major moves only when
we are unanimous in thinking them wise. Eight years of working with Dave, Greg and Walter have
underscored my original belief: Berkshire couldn’ t have better partners.
Somewhat incongruously, MidAmerican also owns the second largest real estate brokerage firm in
the U.S., HomeServices of America. This company operates through 20 locally-branded firms with 18,800
agents. Last year was a slow year for residential sales, and 2008 will probably be slower. We will
continue, however, to acquire quality brokerage operations when they are available at sensible prices.
Here are some key figures on MidAmerican’ s operation:
Earnings (in millions)
2007 2006
U.K. utilities ....................................................................................................... $ 337 $ 338
Iowa utility ......................................................................................................... 412 348
Western utilities (acquired March 21, 2006) ..................................................... 692 356
Pipelines ............................................................................................................. 473 376
HomeServices..................................................................................................... 42 74
Other (net) .......................................................................................................... 130 245
Earnings before corporate interest and taxes...................................................... 2,086 1,737
Interest, other than to Berkshire ......................................................................... (312) (261)
Interest on Berkshire junior debt ........................................................................ (108) (134)
Income tax .......................................................................................................... (477) (426)
Net earnings........................................................................................................ $ 1,189 $ 916
Earnings applicable to Berkshire*...................................................................... $ 1,114 $ 885
Debt owed to others............................................................................................ 19,002 16,946
Debt owed to Berkshire...................................................................................... 821 1,055
*Includes interest earned by Berkshire (net of related income taxes) of $70 in 2007 and $87 in 2006.
11