Warren Buffett: Tax overhaul gives businesses 'huge tailwind'

Warren Buffett during the Berkshire Hathaway annual meeting weekend in Omaha Nebraska US

Warren Buffett during the Berkshire Hathaway annual meeting weekend in Omaha Nebraska US

Buffett's letter to his company's shareholders, an annual exercise undertaken for more than 50 years, is a closely watched event on Wall Street as investors parse the statement for insights and wisdom on the economy and financial markets.

Warren Buffett's Berkshire Hathaway, which owns substantial insurance and reinsurance operations, posted record quarterly and annual results for 2017 - mainly fuelled by the big cuts to U.S. corporate income tax, signed in by President Donald Trump past year.

Warren Buffett is the chairman of Berkshire Hathaway, the investment conglomerate that he and Charlie Munger have run for many years.

But book value per share, a gauge of Berkshire's net worth, climbed 23% a year ago, in big part because of changes to U.S. tax law.

The tax gain Berkshire reported was mostly related to adjustments in the paper value of its deferred taxes and unrealized capital gains on stocks.

Buffett, 87, also avoided dropping any hints about who will take the reins at Berkshire when he retires. He said the investment was made by one of his deputy stock pickers, and that he didn't know the reasons they made it. Both are up a little over 2% this year, but are down almost 7% from their record highs set on January 29.

Berkshire Hathaway's retailing business posted a slight decline in revenues past year, thanks to a slowdown in auto dealership business, while its other retailing operations, including its home furnishings business combined for a slight gain.

"Concurrently, much - indeed, perhaps most - of the p/c world would be out of business". And sometimes I will make expensive mistakes.

"Each has been with Berkshire for decades, and Berkshire's blood flows through their veins".

"Just standing there, day after day, with my bat on my shoulder is not my idea of fun", he has said.

While few details were provided, shares of several insurers and pharmacy benefits managers fell on the news because investors anxious how the venture might disrupt the industry.

"Were we to need the management structure I have just described on an immediate basis, our directors know my recommendations for both posts", he wrote, adding that all candidates now work for or are available to Berkshire. "Hopefully we can find a way where perhaps better care could be delivered even at a somewhat lesser cost".

That strategy has helped Apple generate billions of dollars each quarter over the last several years and aided the company in growing its massive cash hoard.

The report revealed that NICO had a pre-tax underwriting loss of $1.044 billion because of the three hurricanes in the United States, the Mexican earthquakes, Cyclone Debbie and the Californian wildfires.

Hurricanes Harvey, Irma and Maria, as well as California wildfires, were key culprits, and the $3bn pre-tax cost for the hurricanes disappointed some analysts due to their size. During 2017, voluntary auto policies-in-force grew approximately 8.6 percent and premiums per auto policy increased 6.9 percent.

'Berkshire's goal is to substantially increase the earnings of its non-insurance group [of companies],' he said. That compares with $548 million gain the previous year.

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