Flooring News and Information

Omaha, NE, Nov. 12— Berkshire Hathaway posted a third quarter loss as Warren Buffett's holding company recorded a $2 billion-plus charge to cover losses from the terrorist attacks of September 11.

"Normally, I write you once a year," chairman Buffett wrote in a note to his shareholders. "However, results of the third quarter ... are anything but normal and I would like to elaborate a bit on what took place.

Berkshire Hathaway reported a net loss of $679 million, or $445 per share. That compares with net earnings of $797 million, or $523 per share, in the same quarter last year. On an operating basis, the investment holding company posted an operating loss of $895 million, or $586 per share. That compares with operating earnings of $301 million, or $197 per share, in the same period last year.

Buffett said the results include a $2.275 billion charge related to the terrorist attacks. About $1.7 billion in losses came from reinsurance company General Re and $575 million came from Berkshire Hathaway's reinsurance group. But Buffett said the charge is a guess since questions of liability will likely remain unresolved for years.

He said the company, while fully aware that mega catastrophes will happen from time to time, did not prepare for a manmade catastrophe.

"We were foolish in not doing so," he wrote. "In effect, we, and the rest of the industry, included coverage for terrorist acts in policies covering other risks—and received no additional premium for doing so. That was a huge mistake." Buffett said General Re will rework its underwriting practices.

"Our losses from the attacks, though punishing to current earnings, are not significant in relation to Berkshire's intrinsic business value," Buffett said.

The company indicated its near term prospects for Berkshire Hathaway Reinsurance Group are good and its smaller insurance companies are doing well.

Berkshire Hathaway’s retail, manufacturing and services business are feeling the effects of the economy. Berkshire owns such companies as Shaw Industries, R.C. Willey Home Furnishings and International Dairy Queen. The company ended shoes production in the U.S. and Puerto Rico for its Dexter business. "We sustained a loss of $31 million at Dexter, about 20% of that from operations and the balance from the shutdowns."