Omaha, NE (BRK.A; BRK.B) ¾  Berkshire Hathaway Inc.’s fourth quarter earnings will include a pre-tax underwriting loss of about $1.27 billion resulting from General Re’s operations. Other Berkshire insurance subsidiaries, in aggregate, had an underwriting profit for the quarter, (including a reduction in estimated World Trade Center losses of about $45 million) reducing the consolidated fourth quarter underwriting loss to about $1.0 billion.

Approximately $570 million of General Re’s fourth quarter underwriting loss resulted from underreserving for the years 2000 and prior in the North American property/casualty reinsurance operation. For the first nine months of 2001, General Re had already increased these prior years’ loss estimates by $206 million. This underreserving occurred in almost all areas of General Re’s casualty business, including commercial umbrella, professional liability, medical malpractice, general liability and workers compensation lines of business. Long-tail liabilities in lines such as these, particularly reinsurance lines, are inherently difficult to estimate and while Berkshire believes its reserves are now approximately correct, there are no guarantees.

General Re’s underwriting loss also includes an increase of $170 million to the estimate of World Trade Center losses reported in the third quarter as well as an increase of approximately $100 million related to the estimates of other losses reported during the first nine months of 2001. Additionally, General Re’s fourth quarter underwriting results include estimated losses of approximately $46 million arising from Enron related coverages and $143 million arising from a large property loss in its International property/casualty business.

There has been some speculation that property/casualty insurers, already experiencing a terrible year in 2001, will use the fourth quarter for "big-bath" accounting, in which reserves will be built up to ensure that future earnings look better. Berkshire’s correction of earlier reserving does not fall in this category but rather reflects information that General Re’s management and actuaries have learned during the quarter that leads them to believe new reserve levels are required so as to carry its best estimate of its reinsurance liabilities as of December 31, 2001.

Berkshire’s fourth quarter and full year results will not be finalized until Berkshire’s external auditors complete their 2001 annual audit. The audit is scheduled to be completed during the first week of March. Berkshire’s 2001 Annual Report is scheduled to be posted on the Internet on March 9, 2002.

Berkshire Hathaway Inc. and its subsidiaries engage in a number of diverse business activities among which the most important is the property and casualty insurance business conducted on both a direct and reinsurance basis.

Certain statements contained in this press release are "forward looking" statements within the meaning of the Private Securities Litigation Act of 1995. These statements are not guaranties of future performance and actual results may differ materially from those forecasted.

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