CONSOLIDATED BALANCE SHEETS
(dollars in millions except per share amounts)

CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in millions except per share amounts)

	Third Quarter		First Nine Months
	2002	2001	2002	2001
	(Unaudited)		(Unaudited)
Revenues:
Insurance and Other:
Insurance premiums earned	$4,765	$4,213	$13,620	$13,321
Sales and service revenues	4,420	3,900	12,557	10,990
Interest, dividend and other investment income	769	722	2,176	2,105
Realized investment gain	12	326	199	1,228
	9,966	9,161	28,552	27,644
Finance and Financial Products:
Interest income	352	377	1,127	950
Other	319	16	530	150
	671	393	1,657	1,100
	10,637	9,554	30,209	28,744
Cost and expenses:
Insurance and Other:
Insurance losses and loss adjustment expenses	3,836	5,763	10,774	13,777
Insurance underwriting expenses	1,012	885	2,925	2,609
Cost of sales and services	3,121	2,761	8,845	7,708
Selling, general and administrative expenses	809	759	2,343	2,245
Goodwill amortization	¾	145	¾	431
Interest expense	51	43	146	160
	8,829	10,356	25,033	26,930
Finance and Financial Products:
Interest expense	125	211	399	557
Other	124	72	424	178
	249	283	823	735
	9,078	10,639	25,856	27,665
Earnings (loss) before income taxes and   equity in earnings of MidAmerican Energy	1,559	(1,085)	4,353	1,079
Equity in net earnings of MidAmerican Energy	113	39	256	99
Earnings (loss) before income taxes    and minority interest	1,672	(1,046)	4,609	1,178
Income taxes	539	(361)	1,484	451
Minority interest	(8)	(6)	23	27
Net earnings (loss)	$ 1,141	$ (679)	$ 3,102	$ 700
	====	=====	=====	=====
Average common shares outstanding *	1,534,063	1,527,347	1,532,928	1,526,973
Net earnings (loss) per common share *	$ 744	$ (445)	$ 2,024	$ 458
	=====	====	=====	====

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)

Data with respect to investments in equity securities are shown in the tabulation below (in millions).

The tax effects of significant items comprising Berkshire's net deferred tax liabilities as of September 30, 2002 and December 31, 2001 are as follows (in millions).

The following table summarizes Berkshire's common stock activity during the first nine months of 2002.

On May 28, 2002, Berkshire sold 40,000 SQUARZ securities for net proceeds of $398 million. Each SQUARZ security consists of a $10,000 par amount senior note due in November 2007 together with a warrant, which expires in May 2007, to purchase 0.1116 shares of Class A common stock or 3.3480 shares of Class B common stock for $10,000. A warrant premium is payable to Berkshire at an annual rate of 3.75% and interest is payable to note holders at a rate of 3.00% per annum.

Net earnings for the third quarter and first nine months of 2002 and 2001 are disaggregated in the table that follows. Amounts are after deducting minority interest and income taxes. Dollar amounts are in millions.

A summary follows of underwriting results from Berkshire's insurance businesses for the third quarter and first nine months of 2002 and 2001. Dollar amounts are in millions.

Premiums earned in the third quarter of 2002 were $1,697 million, an increase of 10.7% from $1,533 million in 2001. For the first nine months of 2002, premiums earned were $4,899 million, an increase of 8.9% from $4,499 million in 2001. The growth in premiums earned for voluntary auto was 8.4%, reflecting a 6.9% increase in policies-in-force during the past year and modest rate increases.

Policies-in-force over the last twelve months increased 5.7% in the preferred risk auto market and 11.7% in the standard and nonstandard auto lines. Voluntary auto new business sales in the first nine months of 2002 increased 27.7% compared to 2001. The sales closure ratio and the policy retention rate both improved during the first nine months of 2002, which management believes was aided by recent premium rate increases taken by competitors. Voluntary auto policies-in-force increased by about 323,000 during the first nine months of 2002 with strong growth in both the standard and nonstandard lines.

Losses and loss adjustment expenses incurred increased 5.2% to $1,244 million in the third quarter of 2002. For the first nine months of 2002, losses and loss expenses incurred exceeded 2001 by $70 million or 1.9%. The ratio of losses incurred to premiums earned was 76.1% for the first nine months of 2002 compared to 81.3% in 2001. The lower loss ratio in 2002 reflects better than expected loss experience. Claims frequency has benefited from mild weather and the increase in severity has been small for most coverages. Losses incurred from catastrophe events for the first nine months of 2002 totaled approximately $17 million versus $48 million during the comparable 2001 period.

GEICO is a defendant in several class action lawsuits related to the use of collision repair parts not produced by the original auto manufacturers, the calculation of "total loss" value and whether to pay diminished value as part of the settlement of certain claims. Management intends to vigorously defend the corporation’s position on these claim settlement procedures. However, these lawsuits are in various stages of development and the ultimate outcome cannot be reasonably determined at this time.

Underwriting expenses for the third quarter of 2002 increased $51 million (23.1%) from the third quarter of 2001. For the first nine months of 2002, underwriting expenses increased $88 million (12.3%) from the expenses for the comparable period in 2001. A significant portion of the increase in underwriting expense was due to higher profit sharing accruals.

General Re conducts a global reinsurance business. General Re’s principal reinsurance operations are comprised of: (1) North American property/casualty, (2) international property/casualty, which is comprised of direct reinsurance business and broker-market business, and (3) global life/health. The direct international property/casualty and global life/health reinsurance operations are conducted primarily through Germany-based Cologne Re. Broker-market business is conducted through the London-based Faraday operations. At September 30, 2002, General Re held an 89% economic ownership interest in Cologne Re.

General Re’s pre-tax underwriting results for the third quarter and first nine months of 2002 and 2001 are summarized in the table below. Amounts are in millions.

The volume of catastrophe and special risk business written in 2002 periods increased substantially over the corresponding prior year periods, particularly in the special risk markets, reflecting an increase in opportunities to write this business at rates considered adequate by BHRG management. The timing and magnitude of losses can produce extraordinary volatility in periodic underwriting results of BHRG’s catastrophe and special risk business. The comparative underwriting results of 2002 and 2001 exemplify the volatility. Such volatility is accepted, however, provided that the long-term prospect of achieving an underwriting profit is reasonable.

The underwriting results of this business in 2002 reflect relatively minor amounts of catastrophe losses and other large individual property losses. However, a truly significant loss event occurring during the first nine months of 2002 under one of several particularly large policies would have eliminated this unit’s underwriting gains. Underwriting results from catastrophe and special risk contracts for the third quarter and first nine months of 2001 included a net loss of approximately $425 million from the September 11^th terrorist attack. BHRG also recorded an estimated loss of approximately $50 million in the third quarter of 2001 due to an explosion at a chemical plant in France. Periodic underwriting results for catastrophe and special risk business will continue to be extremely volatile.

Retroactive reinsurance policies typically provide very large, but limited, levels of indemnification of unpaid losses and loss adjustment expenses with respect to past loss events, including claims that have not yet been reported to the ceding companies. These policies are expected to include significant amounts of environmental and latent injury claims. It is expected that claims under these contracts will be paid out in the future over a very long period of time. Substantially all of the premiums earned from retroactive reinsurance contracts during 2002 derived from one policy and from three policies in 2001.

The underwriting losses from retroactive reinsurance shown in the table above are primarily attributed to the amortization of deferred charges that are established at the inception of retroactive reinsurance contracts. The deferred charges, which represent the difference between the policy premium and the ultimate estimated claim reserves, are subsequently amortized over the estimated claim payment period using the interest method. The amortization charges are recorded as losses incurred and therefore, produce underwriting losses. The increase in amortization charges in 2002 over 2001 periods relates to the significant amount of new business written in recent years. Unamortized deferred charges at September 30, 2002 totaled approximately $3.1 billion. Deferred charge amortization will produce large underwriting losses over the remainder of 2002 and for the next several years. BHRG believes that these charges will be reasonable relative to the large amounts of float generated from these policies. Income generated from the investment of float is reflected in net investment income.

Premiums earned in the first nine months of 2002 from other reinsurance included approximately $142 million from a new two-year multi-line quota-share contract with a major U.S. insurer and an increase of about $285 million in premiums earned under participation in a Lloyd’s Syndicate and several property quota-share reinsurance contracts with various other Syndicates. Net underwriting results from other reinsurance contracts in 2002 reflect low amounts of property and aviation losses during the year. Underwriting results for the third quarter and first nine months of 2001 include net losses of approximately $150 million arising from the September 11^th terrorist attack.

Berkshire's other primary insurers consist of several businesses, including the National Indemnity ("NICO") Primary group, U.S. Investment Corporation ("USIC"), the Homestate group, Central States Indemnity and Kansas Bankers Surety. Collectively, premiums earned by this group of $192 million and $509 million in the third quarter and first nine months of 2002, respectively, exceeded the corresponding prior year amounts by $62 million (47.7%) and $159 million (45.4%), respectively. The increases in premiums were principally attributed to increased volume by the NICO Primary group and USIC. For the first nine months, Berkshire's other primary insurers produced underwriting gains of $3 million in 2002 and $9 million in 2001.

After-tax net investment income produced by Berkshire’s insurance and reinsurance businesses for the third quarter and first nine months of 2002 and 2001 is summarized in the table below. Dollar amounts are in millions.

The building products group consists of Johns Manville, Benjamin Moore, Acme Building Brands, and MiTek. The comparative increase in revenues of this group for the first nine months of 2002 versus 2001 is principally due to the inclusion of MiTek Inc., acquired July 31, 2001 and Johns Manville, acquired February 27, 2001. Revenues for the third quarter were relatively unchanged in 2002 as compared to 2001, and pre-tax earnings declined $10 million (6.6%). During 2002, Berkshire’s building products businesses benefited from mild weather conditions and favorable economic conditions, including low interest rates, in the residential construction markets. However, slow commercial construction conditions had a negative effect on Johns Manville where comparative third quarter revenues declined $56 million (9.5%) and comparative pre-tax earnings declined $28 million (38.9%).

Pre-tax income of the finance and financial products businesses in the third quarter and first nine months of 2002 periods of $409 million and $793 million, respectively, represent substantial increases over the prior year periods. Significant earnings increases were achieved at BH Finance and Berkadia LLC. BH Finance primarily invests in fixed income instruments on a substantially leveraged basis under a small number of proprietary investing strategies. Such strategies are subject to market conditions, which have been unusually favorable in 2002. This condition is expected to remain throughout the balance of 2002, but at some point profit opportunities from these strategies will certainly diminish and perhaps disappear.

Berkadia commenced operations in August of 2001 upon the completion of FINOVA’s bankruptcy plan of reorganization. Income derived from Berkadia is entirely dependent on an original $5.6 billion term loan to FINOVA. Since the loan was made, FINOVA has made principal prepayments to reduce the loan balance to $2.4 billion at September 30, 2002. For the first nine months of 2002, earnings from Berkadia were $91 million. In the third quarter of 2001, a pre-tax loss of $75 million was attributed to Berkadia, which included a loss of $94 million to write-off Berkadia’s equity investment in FINOVA common stock. Earnings from Berkadia will diminish over time.

Somewhat offsetting the increased profits of BH Finance and Berkadia were operating losses in 2002 from General Re Securities ("GRS"). During the first quarter of 2002, General Re announced that the operations of GRS would be run-off in an orderly manner, which is expected to take several years to complete. GRS generated pre-tax losses of $12 million for the third quarter and $121 million in the first nine months of 2002, which includes charges for employee severance and other run-off related costs. During 2002, GRS also incurred trading losses in restructuring certain positions in connection with the run-off, with the objective of reducing the number of trading positions and related risks. Additional losses will likely be incurred in future periods as additional restructuring transactions take place. GRS produced a $17 million pre-tax operating loss during the first nine months of 2001.

Flight services revenues for the third quarter of 2002 declined 3.0% and for the first nine months increased 6.0% from the comparable periods in 2001. Berkshire’s flight services operations have been negatively affected by the September 11^th terrorist activity and the slowing U.S. economy. On a year to date basis, revenues of NetJets increased 13.6% and revenues of FlightSafety declined 14.2%. The decline in earnings for the third quarter and first nine months of 2002 from the corresponding 2001 periods was primarily due to the aforementioned revenue declines at FlightSafety. NetJets continues to operate unprofitably with losses from Europe exceeding the small profit generated by U.S. operations.

For the third quarter and first nine months of 2002, Shaw achieved volume-driven sales growth in the hard surface and residential carpet product lines. Sales of commercial flooring products continue to lag, however, as a result of lower capital spending by commercial customers. Pre-tax income growth in 2002 reflects increased revenue, coupled with comparatively lower manufacturing costs, which were driven by lower material costs and increased plant operating levels. Shaw management expects that generally overall favorable operating conditions will continue for the rest of 2002. In January 2002, Berkshire acquired the remaining shares of Shaw that were previously held by a group of investors that included Robert Shaw, CEO of Shaw, Julian Saul, President of Shaw, and other managers and former directors of Shaw.

Berkshire’s other non-insurance businesses consist of the results of several smaller businesses, as well as income from investments in MidAmerican. Income from MidAmerican consists of Berkshire’s share of MidAmerican’s net income plus income earned from investments in MidAmerican’s 11% trust preferred securities. For the third quarter and first nine months of 2002, income from MidAmerican totaled $147 million and $326 million, respectively. In 2001, third quarter and first nine months earnings attributed to MidAmerican were $51 million and $136 million, respectively. The increase in income from MidAmerican in 2002 was primarily due to Berkshire’s additional investments during 2002, one-time gains recorded in the second quarter by MidAmerican and the elimination of goodwill amortization effective January 1, 2002. See Note 3 to the Interim Consolidated Financial Statements for additional information regarding Berkshire’s investments in MidAmerican. Otherwise, the increase in earnings of other businesses in 2002 was primarily attributed to newly-acquired businesses, Albecca Inc. on February 8, 2002, Fruit of the Loom, effective April 30, 2002 and Garan, effective September 4, 2002.

Purchase-accounting adjustments reflect the after-tax effect on net earnings with respect to the amortization of fair value adjustments to certain assets and liabilities recorded at various business acquisition dates. Prior to 2002, this amount also included the systematic amortization of goodwill.

Effective January 1, 2002, Berkshire ceased amortizing goodwill of previously acquired businesses in accordance with the provisions of SFAS No. 142. See Note 11 for additional information related to this new accounting standard. Purchase-accounting adjustments for the third quarter and first nine months of 2001 included $140 million and $422 million, respectively, of after-tax goodwill amortization. These amounts do not include Berkshire’s share of goodwill amortization related to its equity method investment in MidAmerican.

Other purchase-accounting adjustments consist primarily of the amortization of the excess of market value over historical cost of fixed maturity investments held by certain businesses at their acquisition dates, primarily at General Re. Berkshire includes such excess in the cost of the investments and subsequently amortizes it over the estimated remaining lives of the investments.

Realized investment gain/loss has been a recurring element in Berkshire's net earnings for many years. Such amounts ¾  recorded when investments (1) are sold; (2) other-than-temporarily impaired; and (3) marked-to-market with a corresponding gain or loss included in earnings ¾  may fluctuate significantly from period to period, resulting in a meaningful effect on reported net earnings. The Consolidated Statements of Earnings include after-tax realized investment gains of $27 million and $216 million for the third quarter of 2002 and 2001, respectively. For the first nine months, after-tax realized investment gains totaled $138 million in 2002 and $780 million in 2001.

Berkshire's balance sheet continues to reflect significant liquidity and a strong capital base. Consolidated shareholders' equity at September 30, 2002 totaled $62.6 billion. Consolidated cash and invested assets, excluding assets of finance and financial products businesses, totaled approximately $77.1 billion at September 30, 2002 and $72.5 billion at December 31, 2001. During the first nine months of 2002, Berkshire deployed about $2.9 billion in internally generated cash for business acquisitions, including $1.7 billion of additional investments in MidAmerican Energy.

Berkshire’s consolidated borrowings under investment agreements and other debt, excluding borrowings of finance businesses, totaled $4.3 billion at September 30, 2002 and $3.5 billion at December 31, 2001. The increase in borrowings during the first nine months of 2002 relates to pre-acquisition debt of Albecca Inc., which was acquired in February 2002, Berkshire’s issuance of the SQUARZ securities in May 2002 and a net increase of $183 million of borrowings under investment agreements. Albecca’s outstanding borrowings at September 30, 2002 primarily consist of $135 million 10.75% senior subordinated notes, due in August 2008. The notes are redeemable beginning in August 2003 and it is Berkshire’s intention to redeem the notes at that time. The SQUARZ securities consist of $400 million par amount of senior notes due in November 2007 together with warrants to purchase Berkshire Class A or Class B common stock, which expire in May 2007. A warrant premium is payable to Berkshire at an annual rate of 3.75% and interest is payable to note holders at a rate of 3.00%.

During the second quarter of 2001, Berkshire filed a shelf registration to issue up to $700 million in new debt securities at a future date. The intended purpose of the future issuance of debt is to fund the repayment of currently outstanding borrowings of certain Berkshire subsidiaries. The timing and amount of the debt to be issued under the shelf registration has not yet been determined.

Berkshire remains contingently liable for the borrowings of Berkadia LLC through a primary guaranty of 90% of its debt and a secondary guaranty of the remaining 10% of Berkadia’s borrowings through Fleet Bank. At September 30, 2002, Berkadia’s unpaid loan balance was $2.4 billion.

Assets of the finance and financial products businesses totaled $35.5 billion at September 30, 2002 and $41.6 billion at December 31, 2001. The overall decline reflects a decline in assets of GRS, which commenced running-off its operations earlier in 2002, lower investments at BH Finance LLC and $2.5 billion in repayments of Berkadia’s loan receivable from FINOVA.

Notes payable and other borrowings of Berkshire’s finance and financial products businesses totaled $4.7 billion at September 30, 2002 and $9.0 billion at December 31, 2001. These balances include Berkadia’s outstanding term loan of $2.4 billion at September 30, 2002 and $4.9 billion at December 31, 2001. The remaining decrease in finance business borrowings relates to decreases in notes payable and commercial paper borrowings by GRS.

Berkshire believes that it currently maintains sufficient liquidity to cover its existing requirements and provide for contingent liquidity needs.

In applying certain accounting policies, Berkshire’s management is required to make estimates and judgments regarding transactions that have occurred and ultimately will be settled several years in the future. Amounts recognized in the financial statements from such estimates are necessarily based on assumptions about numerous factors involving varying, and possibly significant, degrees of judgment and uncertainty. Accordingly, the amounts currently recorded in the financial statements may prove, with the benefit of hindsight, to be inaccurate. The balance sheet items most significantly affected by these estimates are property and casualty insurance and reinsurance related liabilities, valuation of invested assets where no market quotations are available and reviewing for goodwill impairments.

Berkshire accrues liabilities for unpaid losses under property and casualty insurance and reinsurance contracts based upon estimates of the ultimate amounts payable under the contracts related to losses occurring on or before the balance sheet date. As of any balance sheet date, all claims have not yet been reported and some claims may not be reported for many years. As a result, the liability for unpaid losses includes significant estimates for incurred-but-not-reported claims. Additionally, reported claims are in various stages of the settlement process. Each claim is settled individually based upon its merits and certain liability or workers’ compensation claims may take years to settle, especially if legal action is involved.

Berkshire uses a variety of techniques to establish the liabilities for unpaid claims recorded at the balance sheet date. While techniques may vary, each employs significant judgments and assumptions. Techniques may involve detailed statistical analysis of past claim reporting, settlement activity, claim frequency and severity data when sufficient information exists to lend statistical credibility to the analysis. The analysis may be based upon internal loss experience, the experience of clients or industry experience. Techniques may vary depending on the type of claim being estimated. More judgmental techniques are used in lines of business when statistical data is insufficient or unavailable. Liabilities may also reflect implicit or explicit assumptions regarding the potential effects of future economic and social inflation, judicial decisions, law changes, and recent trends in such factors.

Receivables recorded with respect to insurance losses ceded to other reinsurers under reinsurance contracts are estimated in a manner similar to liabilities for insurance losses and, therefore, are also subject to estimation error. In addition to the factors cited above, estimates of reinsurance recoveries may prove uncollectible if the reinsurer is unable to perform under the contract. Reinsurance contracts do not relieve the ceding company of its obligations to indemnify its own policyholders.

Berkshire’s Consolidated Balance Sheet includes estimated liabilities for unpaid losses from property and casualty insurance and reinsurance contracts of $42.6 billion and reinsurance receivables of $2.7 billion at September 30, 2002. Due to the inherent uncertainties in the process of establishing these amounts, the actual ultimate claims amounts will differ from the currently recorded amounts. A small percentage change in estimates of this magnitude will result in a material effect on reported earnings. For instance, a 5% increase in the September 30, 2002 net estimate would produce a $2.0 billion charge to pre-tax earnings. Future effects from changes in these estimates will be recorded as a component of losses incurred in the period of the change.

Berkshire records deferred charges as assets on its balance sheet with respect to liabilities assumed under retroactive reinsurance contracts. At the inception of these contracts the deferred charges represent the difference between the consideration received and the estimated ultimate liability for unpaid losses. The deferred charges are amortized as a component of losses incurred using the interest method over an estimate of the ultimate claim payment period. The deferred charge balance may be adjusted periodically to reflect new projections of the amount and timing of loss payments. Adjustments to these assumptions are applied retrospectively from the inception of the contract. Unamortized deferred charges totaled $3.2 billion at September 30, 2002. Significant changes in either the timing or ultimate amount of loss payments may have a significant effect on unamortized deferred charges and the amount of periodic amortization.

Berkshire’s financial position reflects large amounts of invested assets, including assets of its finance and financial products businesses. A substantial portion of these assets are carried at fair values based upon current market quotations and, when not available, based upon fair value pricing models. Berkshire’s finance businesses maintain significant balances of finance receivables, which are carried at amortized cost. Considerable judgment is required in determining the assumptions used in certain pricing models, which may address interest rates, loan prepayment speeds, and creditworthiness of the issuer.

Berkshire’s Consolidated Balance Sheet as of September 30, 2002 includes goodwill of acquired businesses of approximately $22.3 billion. These amounts have been recorded as a result of Berkshire’s numerous prior business acquisitions accounted for under the purchase method. Prior to 2002, goodwill from each acquisition was generally amortized as a charge to earnings over periods not exceeding 40 years. Under SFAS No. 142, which was adopted by Berkshire as of January 1, 2002, periodic amortization ceased, in favor of an impairment-only accounting model.

A significant amount of judgment is required in performing goodwill impairment tests. Such tests include periodically determining or reviewing the estimated fair value of Berkshire’s reporting units. Under SFAS No. 142, fair value refers to the amount for which the entire reporting unit may be bought or sold. There are several methods of estimating reporting unit values, including market quotations, asset and liability fair values and other valuation techniques, such as discounted cash flows and multiples of earnings or revenues. If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, then individual assets, including identifiable intangible assets and liabilities of the reporting unit are estimated at fair value. The excess of the estimated fair value of the reporting unit over the estimated fair value of net assets would establish the implied value of goodwill. The excess of the recorded amount of goodwill over the implied value is charged-off as an impairment loss.

Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statements of Berkshire officials during presentations about Berkshire, are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future Berkshire actions, which may be provided by management are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about Berkshire, economic and market factors and the industries in which Berkshire does business, among other things. These statements are not guaranties of future performance and Berkshire has no specific intention to update these statements.

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The principal important risk factors that could cause Berkshire’s actual performance and future events and actions to differ materially from such forward-looking statements, include, but are not limited to, changes in market prices of Berkshire's significant equity investees, the occurrence of one or more catastrophic events, such as an earthquake or hurricane that causes losses insured by Berkshire's insurance subsidiaries, changes in insurance laws or regulations, changes in Federal income tax laws, and changes in general economic and market factors that affect the prices of securities or the industries in which Berkshire and its affiliates do business, especially those affecting the property and casualty insurance industry.