Buffett's Berkshire Hathaway gains as insurance lifts first-quarter profit and cash nears $200 billion

cnbc.com:

Berkshire Hathaway shares rose in premarket trading Monday after Warren Buffett's conglomerate reported a surge in operating earnings as well as a record cash hoard.

Berkshire's Class A shares were higher by 1.5% in the premarket. Meanwhile, Class B shares last gained about 1.2%.

Those moves come after the conglomerate posted first-quarter operating profit of $11.22 billion, up 39% from the year-ago period, mainly driven by an increase in insurance underwriting earnings. Operating profit measures earnings encompassing all of Berkshire's businesses.

The strength in the insurance businesses, particularly its crown jewel Geico, comes as the sector as a whole benefits from stronger demand and increased pricing power. Insurance underwriting earnings rose to $2.598 billion, a 185% increase from $911 million in the year-earlier quarter. Geico earnings swelled 174% to $1.928 billion from $703 million a year prior.

Berkshire's cash hoard swelled to a record, partly due to the holding company's inability in recent years to find a suitable acquisition target. Cash soared to a record $188.99 billion in the first quarter, up from $167.6 billion in the fourth quarter.

«We had much-improved earnings in insurance underwriting. And then our investment income was almost certain to increase,» Buffett said Saturday at the conglomerate's annual shareholder meeting in Omaha, Nebraska. «And I said that in the annual report because yields are so much higher than they were last year. And we have a lot of fixed, short-term investments that are very responsive to the changes in interest rates.»

Berkshire Hathaway shares have already outperformed this year, with each share class having advanced more than 10%. The S&P 500 is up by more than 7% this