In today’s newsletter: Berkshire Hathaway shares are hitting fresh 52-week highs and Senate Democrats are accusing major insurers, including Berkshire Hathaway, of setting back efforts to fight climate change by insuring new fossil fuel projects.
Today, the Class A shares traded as high as $515,000 each, a fresh 52-week high, before losing some ground to end slightly lower on the day.
Their climb from their most recent low is even steeper than the S&P’s, with a gain of 28.0% from late September when they fell just below $400,000.
But so far this year, the S&P’s gain of almost 12%, excluding dividends, is outperforming Berkshire’s 9% advance. When dividends are included, the S&P is up 12.8%.
Senate Dems critical of Berkshire for insuring fossil fuel projects
Berkshire Hathaway is one of several major U.S. insurers being investigated by Democrats on the Senate Budget Committee for what the lawmakers see as their “support” of new fossil fuel projects.
Reuters reports Berkshire, AIG, Travelers, Chubb, Liberty Mutual, Starr, and State Farm are being asked to explain “why and how they are still supporting the underwriting of and investment in new and expanded fossil fuel projects.”
In a letter to Warren Buffett released by the committee, Sheldon Whitehouse of Rhode Island, the panel’s chairman, writes that unlike other large insurers around the world that have “backed away” from insuring new coal projects, “Berkshire Hathaway sticks out as a key laggard that has not taken any steps to restrict its underwriting or investments of fossil fuel projects.”
Noting that Berkshire Hathaway Energy “owns at least eleven coal power plants” and BNSF, Berkshire freight railroad, “also ships a great deal of coal,” Whitehouse says Berkshire’s “connection to the U.S. coal industry runs deep.”
Sen. Sheldon Whitehouse (D-RI) on Capitol Hill, May 25, 2022. REUTERS/Joshua Roberts
While acknowledging BHE’s “sizable investments” in renewable energy, Whitehouse tells Buffett that his “refusal to wind down fossil fuel investments in line with climate change goals is inconsistent with the positions of many insurance leaders who see climate change as a material concern for insurance companies and their shareholders.”
“We have a general tendency to be pessimistic in our assumptions about the likelihood of natural catastrophes, but we would have that general bias, which I think is useful, regardless, if there were no carbon emissions of any kind going on.
“We would still assume that whatever the past history had been of natural disasters, we would assume that they were going to be somewhat worse. And the global warming, in terms of resetting prices of insurance from year to year, is not a real factor.”
Please send any questions or comments about the newsletter to me at [email protected]?subject=Buffett newsletter feedback”>[email protected]. (Sorry, but we don’t forward questions or comments to Buffett himself.)
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Also, Buffett’s annual letters to shareholders are highly-recommended reading. There are collected here on Berkshire’s website.
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