Earnings soar 35% at Berkshire Hathaway

Berkshire Hathaway, the holding company run by the billionaire US investor Warren Buffett, reported a 35 per cent rise in quarterly profits last night, as its insurance operations benefited from rising premiums.

Berkshire, whose insurance and reinsurance businesses provide money for Mr Buffett to invest, reported a net second-quarter profit of $1.0bn (£65m), or $681 a share. That compared with $773m, or $506 a share, the year before.

Excluding $13mgains from selling investments, Berkshire posted an operating profit of $673 a share, up from $231 a year ago and beating Wall Street's expectations of $550 a share.

The rise in profits came as insurance and reinsurance rates continue to soar, after a decade of declines. Price increases were only accelerated by a surge in demand for insurance and a tightening of supply after 11 September.

Mr Buffett, who has won a devoted following among retail investors with his policy of seeking out long-term "value" investments, has been taking advantage of the stock market falls to buy up assets from distressed telecoms and energy companies. This year he has spent $2.3bn on gas pipelines and invested more than $100m in the telecoms group Level 3.

Berkshire's Class A stock, which has not been split in Buffett's 37 years in charge, closed at $71,000 a share in New York. The stock has fallen 6 per cent this year, outperforming the S&P 500 index, which has fallen 21 per cent.