American International Group, Inc. (AIG), Berkshire Hathaway Inc. (BRK.A): One Mind-Blowing Revelation The Buffett Bulls Might’ve Missed

Another Berkshire Hathaway Inc. (NYSE:BRK.A) peer, Hartford Financial Services Group Inc (NYSE:HIG), recently reported a loss of $241 million, versus a prior-year period profit of $96 million. The loss included a $541 million charge associated with hedging a book of troubled annuities in Japan. Buffett briefly discussed his competitors’ issues with annuities during the meeting, explaining that it was his belief that certain companies had overextended themselves with life insurance and annuities—Hartford Financial Services Group Inc (NYSE:HIG) may be one such company.

Berkshire

Berkshire Hathaway Inc. (NYSE:BRK.A) continues to produce impressive revenues. At the meeting, Buffett reported net operating earnings of $3.78 billion for the first quarter of 2013. Net earnings including investments earnings were $4.89 billion, more than a 50% increase from first-quarter net earnings of $3.24 billion in 2012. Revenues attributable to insurance underwriting jumped from $54 million in the first quarter of 2012 to $901 million in the most recent quarter. Non-insurance income rose slightly to $2.44 billion from $1.99 billion.

Berkshire’s share price has also performed very well recently, up 35.24% in the past 12 months, while the S&P 500 is up only 19.37% during the same time. Historically, Berkshire has outperformed the S&P; from 1965 to 2012, the compounded annual gain of Berkshire Hathaway Inc. (NYSE:BRK.A) was 19.7%, versus a 9.4% appreciation for the S&P.

Final thoughts

Although commercial insurance may be a new entry for Berkshire, Buffett clearly has the market recognition to make a mark in the sector. An increased float from commercial insurance would provide Berkshire with even greater capital for investment and acquisitions.

Some of Berkshire Hathaway Inc. (NYSE:BRK.A)’s competitors are facing major issues, with AIG having lower revenue, and Hartford Financial Services Group Inc (NYSE:HIG) reporting a loss in the most recent quarter.  Thus, Berkshire appears to be poised for further growth, and maintains significant advantages over its competitors. Check out Berkshire Hathaway’s favorite equity investments here.

Disclosure: none