Berkshire Hathaway just posted its third quarter earnings. It appears CDS exposure actually benefited the company and helped tripled their net income.
Third-quarter net income came in at $3.24 billion, or $2,087 per Class A equivalent share, versus $1.06 billion, or $682 per Class A equivalent share, a year earlier.
Here’s the breakdown:
Berkshire Hathaway: Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries for the third quarter and first nine months of 2009 and 2008 are summarized below. Earnings are stated on an after-tax basis. (Dollar amounts are in millions, except for per share amounts).
Gains from derivative contracts during the third quarter primarily relate to our credit default derivative contracts and to a lesser degree to long duration equity index put option contracts. As we have previously discussed, our derivative contracts, subject as they are to mark-to-market accounting, will produce extreme volatility in our periodic reported earnings.
During the third quarter of 2009, our book value increased to $81,247 per Class A equivalent share, an increase of 15.2% from yearend and 10.1% from the end of the second quarter. In addition to our net worth of $126.1 billion, which has increased by $16.8 billion since yearend, insurance float (the net funds that we hold pursuant to insurance contracts and that we can invest for our benefit) increased from year end by about $4 billion to approximately $62 billion at September 30, 2009.