Berkshire Hathaway profits up as Buffett's market bets book billions

Berkshire Hathaway (BRK.A, BRK.B), the conglomerate built by legendary investor Warren Buffett, reported its earnings after market close on Friday. Operating earnings of $1.78 billion were down 21.6 percent from the comparable quarter in 2008, although reported GAAP earnings per share were aided by a reversal in the mark-to-market effect of derivatives contracts written on major stock indices. On the quarter, derivatives gains of more than $1.5 billion helped push GAAP net income to $3.3 billion, although Buffett has publicly stated that he overlooks such fluctuations in assessing results.

With Berkshire's diversified ownership of firms in numerous industries, the company is often assessed in three parts: insurance (including GEICO and Gen Re), investments, and other operations. The non-insurance business saw operating earnings nearly cut in half, and insurance underwriting results suffered as well, falling 77 percent from last year. The downbeat insurance earnings were offset by a jump in investment income, as Berkshire's sizable float benefited from the rally in global risk assets.