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Berkshire Hathaway gained $29bn from tax law, can handle $400bn catastrophe

Staff Writer |
Berkshire Hathaway reported that its net earnings attributable to shareholders for the fourth-quarter surged to $32.55 billion from $6.29 billion last year.

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Net earnings per Class A equivalent share attributable to shareholders jumped to $19,790 from $3,823 last year. The company posted a $29.11 billion gain in the latest-quarter related to changes in U.S. tax law.

But, operating earnings for the quarter declined to $3.338 billion from $4.382 billion in the previous year.

Berkshire's gain in net worth during 2017 was $65.3 billion which increased per-share book value by 23% since yearend 2016 to $211,750 per Class A equivalent share ($141.17 per Class B equivalent share). Insurance float at December 31, 2017 was approximately $114 billion.

"The $65 billion gain is nonetheless real – rest assured of that. But only $36 billion came from Berkshire’s operations.

"The remaining $29 billion was delivered to us in December when Congress rewrote the U.S. Tax Code," the company said.

In his annual letter to shareholders of Berkshire Hathaway, Warren Buffett said “no company comes close” to his conglomerate in its ability to financially withstand even a mega-catastrophe that causes $400 billion of insurance losses.

Buffett said the odds of such a catastrophe in any year is just 2 percent, but that Berkshire would lose only about $12 billion, a sum more than offset by annual profits from its non-insurance businesses.

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