The Berkshire Hathaway insurance and reinsurance businesses are estimated to face losses from the Los Angeles, California wildfires amounting to as much as $1.3 billion, while the company also disclosed underwriting fewer property reinsurance premiums in 2024.The company reported, “In January 2025, several wildfires broke out in Southern California resulting in thousands of destroyed or damaged structures.“We preliminarily estimate our insurance group could incur pre-tax losses of approximately $1.3 billion from these wildfires.” It’s a sizeable impact to the company, but given the scale of the Berkshire Hathaway insurance and reinsurance empire certainly manageable.The company also updated on the losses it suffered from 2024’s hurricanes Helene and Milton.

Recall that, Berkshire Hathaway had given an early estimate after its third-quarter results last year, in which it estimated losses from hurricane Helene for Q3 at $565 million and then also said that it expected up to $1.5 billion of additional losses from hurricane Milton in the fourth-quarter.In the full-year 2024 results announced on Saturday, Berkshire Hathaway reported that its underwriting results for 2024 included estimated claims from Hurricanes Helene and Milton of $1.2 billion after-tax.Showing that Berkshire had likely pegged its initial Milton loss on the industry views that were around at the time and that ended up being higher than the ultimate losses most companies had suffered now imply.

In the property and casualty (P&C) reinsurance business at Berkshire Hathaway, the company reports that losses from significant catastrophe events were approximately $800 million in 2024, down slightly on 2023’s $900 million.So, with $1.3 billion estimated across the insurance and reinsurance businesses for the wildfires, it’s likely a relatively meaningful portion of this will fall to the P&C reinsurance arms.However, it seems Berkshire Hathaway’s reinsurance businesses pulled-back somewhat from writing property reinsurance in 2024, which may surprise some given how the rate environment was.

Berkshire reports for the P&C reinsurance arm, “Premiums written in 2024 declined $461 million (2.1%) versus 2023, attributable to lower overall property volumes, partly offset by generally higher rates, new business and increased participations in certain casualty lines.Premiums earned in 2024 increased 1.4% compared to 2023.” Suggesting that the P&C reinsurance arms of Berkshire Hathaway had perhaps reached their current risk appetite levels for property reinsurance risks, while benefiting from the earnings coming through thanks to the hard marketplace.Warren Buffett himself perhaps hints at the why.

In his annual letter, Buffett wrote, “In general, property-casualty (“P/C”) insurance pricing strengthened during 2024, reflecting a major increase in damage from convective storms.Climate change may have been announcing its arrival.However, no “monster” event occurred during 2024.

“Someday, any day, a truly staggering insurance loss will occur – and there is no guarantee that there will be only one per annum.” Buffett also highlighted Berkshire Hathaway’s strength, “We are not deterred by the dramatic and growing loss payments sustained by our activities.(As I write this, think wildfires.) It’s our job to price to absorb these and unemotionally take our lumps when surprises develop.” He also noted that, “Property damage arising from hurricanes, tornadoes and wildfires is massive, growing and increasingly unpredictable in their patterns and eventual costs.” ..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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