Berkshire’s earnings slip as Buffett’s insurers slump

Warren Buffett’s Berkshire Hathaway Inc. is finding it hard to grind out higher profits this year, in large part because of slumping results at its insurance businesses.

Gains at the conglomerate’s railroad and energy units weren’t enough to overcome an underwriting loss during the second quarter, the company said Friday in a statement. Operating profit slid for the third straight period.

Buffett, 86, is still sitting on a mountain of cash. At the end of the quarter, his company had almost US$100 billion. The record bal- ance prompted the billionaire to say earlier this year that he hadn’t put his “foot to the floor” on an acquisition for a long time. It also fuelled speculation that he might buy something that’s big even by his standards.

In the meantime, Buffett has been finding other places to invest. Berkshire bought a stake in a real estate investment trust and agreed in June to prop up Home Capital Group Inc., an embattled Canadian mortgage lender.

In early July, the energy arm of his conglomerate announced a US$9 billion deal to buy the parent company of the largest electric- transmission operator in Texas, though the agreement is being challenged by Paul Singer’s Elliott Management Corp. Berkshire has also held talks with Sprint Corp. chairman Masayoshi Son about making an investment, according to a person familiar with the matter.

While those deals could soak up a lot of excess cash at Berkshire, its dozens of businesses continue to generate more. All together, they produced US$4.12 billion of operating profit in the second quarter, an 11 per cent decline from a year earlier.