Buffett's Firm Relying Less On Insurance Units

Buffett's firm relying less on insurance units Associated Press Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Updated 4:53 a.m., Friday, August 31, 2012 [...] Buffett's advancing age — he turned 82 on Thursday — coupled with his radiation treatment for prostate cancer this summer, keeps his mortality on the minds of many Berkshire investors. The Omaha-based company now relies less on the insurance companies and investments it has long been known for and more on its railroad, utility and manufacturing companies. Berkshire Hathaway Inc.'s second-quarter earnings report earlier this month showed that easily more than half of the company's profits come from mostly mundane companies like its electric utility MidAmerican Energy, Lubrizol, BNSF railroad, manufacturing and tool companies. "Even in the best of operating environments, the insurance side of the business will never out-earn the non-insurance side ever again," said David Rolfe, chief investment officer at Wedgewood Partners, which counts Berkshire as its second-biggest investment. The shift in the mix of Berkshire's businesses could make the company more attractive to investors who found the world of insurance and reinsurance complicated. [...] the derivative contracts Buffett wrote insuring the level of certain stock market indexes could create multibillion-dollar losses if they weren't priced right, although Buffett has said he believes those deals will prove profitable. "At any moment, he could buy some other insurance thing and that could look big again," Kilpatrick said. Besides insurance and manufacturing, Berkshire's subsidiaries include clothing, furniture, ice cream, private jet and jewelry companies.