Results of Operations

Net earnings attributable to Berkshire are disaggregated in the table that
follows. Amounts are after deducting income taxes and exclude earnings
attributable to noncontrolling interests. Amounts are in millions.

                                            Third Quarter           First Nine Months
                                          2009         2008         2009          2008
Insurance - underwriting                 $   363     $     81     $     665     $    622
Insurance - investment income                976          809         3,168        2,495
Utilities and energy                         346          324           802          848
Manufacturing, service and retailing         336          665           833        1,871
Finance and financial products                92           91           252          397
Other                                        (58 )         99          (180 )         37
Investment and derivative gains/losses     1,183       (1,012 )        (541 )     (1,393 )
Net earnings attributable to Berkshire   $ 3,238     $  1,057     $   4,999     $  4,877

Berkshire's operating businesses are managed on an unusually decentralized basis. There are essentially no centralized or integrated business functions (such as sales, marketing, purchasing, legal or human resources) and there is minimal involvement by Berkshire's corporate headquarters in the day-to-day business activities of the operating businesses. Berkshire's corporate office management participates in and is ultimately responsible for significant capital allocation decisions, investment activities and the selection of the Chief Executive to head each of the operating businesses. The business segment data (Note 17 to the Consolidated Financial Statements) should be read in conjunction with this discussion.

The declines in global economic activity over the last half of 2008 continued through the first nine months of 2009. Berkshire's operating results in 2009 were significantly impacted by those declines. Earnings in 2009 of most of Berkshire's diverse group of manufacturing, service and retailing businesses declined, in some cases severely, compared to the prior year. The effects from the economic recession resulted in lower sales volume, revenues and profit margins as consumers have significantly curtailed spending, particularly for discretionary items. Berkshire's two largest business segments, insurance and utilities, remain strong and operating results have not been negatively impacted in any significant way by the recession.

Investment and derivative gains were $1,183 million in the third quarter of 2009, while in the first nine months there were losses of $541 million. The gains and losses primarily derived from credit default contracts, dispositions of certain equity securities, other-than-temporary impairment charges with respect to certain equity securities and changes in estimated fair values of long duration equity index put option contracts. Changes in the equity and credit markets from period to period have caused and will likely continue to cause significant volatility in periodic earnings.

In response to the crises in the financial and capital markets and global recession, the U.S. and other governments around the world are taking measures to stabilize financial institutions, regulate markets (including over-the-counter derivatives markets) and stimulate economic activity. While management believes such actions will be successful, the ultimate impact on Berkshire is not clear at this time. Berkshire's operating companies have taken and will continue to take cost reduction actions as necessary to manage through the current economic situation. Management believes that the economic franchises of Berkshire's business operations remain intact and that operating results will ultimately improve, although it cannot predict the timing of an economic recovery that will be required to have this happen.

Insurance -Underwriting

Berkshire's management views insurance businesses as possessing two distinct operations - underwriting and investing. Underwriting decisions are the responsibility of the unit managers; investing, with limited exception, is the responsibility of Berkshire's Chairman and CEO, Warren E. Buffett. Accordingly, Berkshire evaluates performance of underwriting operations without any allocation of investment income.

Berkshire provides both primary insurance and reinsurance of property and casualty risks. Through General Re, Berkshire also reinsures life and health risks. Berkshire's principal insurance and reinsurance underwriting units are:
(1) GEICO, (2) General Re, (3) Berkshire Hathaway Reinsurance Group and
(4) Berkshire Hathaway Primary Group.

Periodic underwriting results can be affected significantly by changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years. In addition, the timing and amount of catastrophe losses produce significant volatility in periodic underwriting results. A key marketing strategy followed by all of the insurance businesses is the maintenance of extraordinary capital strength. Statutory surplus of Berkshire's insurance businesses was approximately $51 billion at December 31, 2008. This superior capital strength creates opportunities, especially with respect to reinsurance activities, to negotiate and enter into insurance and reinsurance contracts specially designed to meet the unique needs of insurance and reinsurance buyers.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Insurance -Underwriting (Continued)

A summary follows of underwriting results from Berkshire's insurance businesses.
Amounts are in millions.

                                              Third Quarter          First Nine Months
                                             2009        2008         2009          2008
Underwriting gain (loss) attributable to:
GEICO                                       $   200     $  246     $       459      $ 730
General Re                                      186         54             446        198
Berkshire Hathaway Reinsurance Group            167       (166 )            79        (58 )
Berkshire Hathaway Primary Group                  7         (8 )            40         98
Pre-tax underwriting gain                       560        126           1,024        968
Income taxes and noncontrolling interests       197         45             359        346
Net underwriting gain                       $   363     $   81     $       665      $ 622

GEICO

GEICO provides primarily private passenger automobile coverages to insureds in all 50 states and the District of Columbia. GEICO policies are marketed mainly by direct response methods in which customers apply for coverage directly to the company via the Internet, over the telephone or through the mail. This is a significant element in GEICO's strategy to be a low-cost insurer. In addition, GEICO strives to provide excellent service to customers, with the goal of establishing long-term customer relationships. GEICO's underwriting results are summarized in the table below. Dollar amounts are in millions.

                                        Third Quarter                                 First Nine Months
                                2009                    2008                     2009                    2008
                         Amount         %        Amount         %         Amount         %        Amount         %
Premiums
earned                   $ 3,448       100.0     $ 3,150       100.0     $ 10,103       100.0     $ 9,268       100.0
Losses and loss
adjustment expenses        2,636        76.5       2,350        74.6        7,798        77.2       6,868        74.1
Underwriting expenses        612        17.7         554        17.6        1,846        18.3       1,670        18.0
Total losses and
expenses                   3,248        94.2       2,904        92.2        9,644        95.5       8,538        92.1
Pre-tax underwriting
gain                     $   200                 $   246                 $    459                 $   730

Premiums earned in the third quarter and first nine months of 2009 increased $298 million (9.5%) and $835 million (9.0%), respectively, over premiums earned in the corresponding 2008 periods. The growth in premiums earned for voluntary auto was 9.0% for the first nine months of 2009, reflecting an increase in policies-in-force of 10.1% offset somewhat by a decrease in average premiums per policy. It is believed that the weak economic conditions have caused customers to raise policy deductibles and reduce coverage in order to save money. Voluntary auto new business sales in the first nine months of 2009 increased 18.2% versus 2008. Growth was particularly strong during the first quarter and slowed to more normal rates in the second and third quarters. Voluntary auto policies-in-force at September 30, 2009 were 662,000 greater than at December 31, 2008.

Losses and loss adjustment expenses incurred in the third quarter and first nine months of 2009 increased $286 million (12.2%) and $930 million (13.5%), respectively, over amounts incurred in 2008 periods. The loss ratio was 77.2% in the first nine months of 2009 compared to 74.1% in 2008. The higher loss ratio in 2009 reflected overall increases in average claim frequencies and injury claim severities. Claims frequencies in 2009 for physical damage coverages increased in the two to four percent range, while frequencies for injury coverages increased in the eight to ten percent range compared with the very low frequency levels in 2008. Average injury severities in 2009 increased in the three to five percent range while average physical damage severities decreased in the three to five percent range from 2008. Incurred losses from catastrophe events for the first nine months of 2009 were $73 million compared to $88 million for the first nine months of 2008. Underwriting expenses in the first nine months of 2009 increased 10.5% over 2008 to $1,846 million due primarily to higher policy issuance costs and increased salary and employee benefit expenses.

Insurance -Underwriting (Continued)

General Re

General Re conducts a reinsurance business offering property and casualty and life and health coverages to clients worldwide. Property and casualty reinsurance is written in North America on a direct basis through General Reinsurance Corporation and internationally through Cologne Re (based in Germany) and other wholly-owned affiliates. Property and casualty reinsurance is also written through brokers with respect to Faraday in London. Life and health reinsurance is written worldwide through Cologne Re. General Re strives to generate underwriting gains in essentially all product lines. Underwriting performance is not evaluated based upon market share and underwriters are instructed to reject inadequately priced risks. General Re's underwriting results are summarized in the following table. Amounts are in millions.

                                                             Premiums earned                                Pre-tax underwriting gain/loss
                                                 Third Quarter          First Nine Months             Third Quarter             First Nine Months
                                               2009        2008          2009         2008         2009           2008         2009            2008
Property/casualty                             $   820     $   819     $    2,397     $ 2,678     $    107       $    (13 )   $     298       $     57
Life/health                                       656         639          1,884       1,972           79             67           148            141
                                              $ 1,476     $ 1,458     $    4,281     $ 4,650     $    186       $     54     $     446       $    198

Property/casualty

Property/casualty premiums earned in the third quarter of 2009 were relatively flat when compared to the third quarter of 2008. Premiums earned in the first nine of months of 2009 declined $281 million (10.5%), versus the corresponding 2008 period. Premiums earned in 2008 included $205 million from a reinsurance-to-close transaction in the first quarter that increased General Re's economic interest in the runoff of Lloyd's Syndicate 435's 2000 year of account from 39% to 100%. Under this transaction, General Re also assumed a corresponding amount of net loss reserves and as a result, there was no impact on net underwriting gains in the first quarter of 2008. There was no similar transaction in 2009.

Excluding the effect of the reinsurance-to-close transaction in 2008 and the effects of foreign currency translation rate changes, premiums earned in the first nine months of 2009 increased $91 million (3.7%). The increase was due primarily to increased volume in Europe and lower retrocessions of Lloyd's market business.

In 2009, underwriting gains were $107 million in the third quarter and $298 million for the first nine months. Underwriting gains for the first nine months of 2009 included gains of $260 million from property business and $38 million from casualty/workers' compensation business. The property results in 2009 were net of $80 million of losses from catastrophes, primarily from winter storm Klaus in Europe, the Victoria bushfires in Australia and an earthquake in Italy. The timing and magnitude of catastrophe and large individual losses can produce significant volatility in periodic underwriting results. The underwriting gains from casualty/workers' compensation business reflected the overall favorable run-off of prior years' loss reserves.

In 2008, underwriting losses were $13 million in the third quarter and underwriting gains were $57 million for the first nine months. Underwriting gains for the first nine months of 2008 included gains of $126 million from property business and losses of $69 million from casualty/workers' compensation business. Property results for the first nine months of 2008 included $186 million of catastrophe losses arising primarily from Hurricanes Ike and Gustav in the third quarter, and winter storm Emma in Germany and hailstorms in Europe, which occurred in the first half of 2008. Casualty losses were adversely impacted by legal costs incurred in connection with the regulatory investigations of finite reinsurance.

Life/health

Premiums earned in the third quarter and first nine months of 2009 were $656 million and $1,884 million, respectively, an increase of $17 million (2.7%) and a decrease of $88 million (4.5%) from the 2008 comparable periods. Excluding the effects of changes in foreign currency translation rates, premiums earned in the first nine months of 2009 increased by $46 million (2.3%) due to increased international business. The life/health operations produced underwriting gains of $79 million and $148 million in the third quarter and first nine months of 2009, respectively, an increase of $12 million (17.9%) and $7 million (5.0%) over the corresponding 2008 periods. This was due primarily to lower losses in the U.S. long-term health business.

Insurance -Underwriting (Continued)

Berkshire Hathaway Reinsurance Group

The Berkshire Hathaway Reinsurance Group ("BHRG") underwrites excess-of-loss reinsurance and quota-share coverages for insurers and reinsurers worldwide. BHRG's business includes catastrophe excess-of-loss reinsurance and excess direct and facultative reinsurance for large or otherwise unusual discrete property risks referred to as individual risk. Retroactive reinsurance policies provide indemnification of losses and loss adjustment expenses with respect to past loss events. Other multi-line refers to other business written on both a quota-share and excess basis, participations in and contracts with Lloyd's syndicates, as well as property, aviation and workers' compensation programs. BHRG's underwriting results are summarized in the table below. Amounts are in millions.

                                        Premiums earned                              Pre-tax underwriting gain/loss
                            Third Quarter          First Nine Months            Third Quarter           First Nine Months
                          2009        2008          2009         2008         2009          2008        2009           2008
Catastrophe and
individual risk          $   197     $   292     $      692     $   731     $    271       $ (102 )   $     593       $  248
Retroactive
reinsurance                    -           -          1,886           3         (137 )       (104 )        (339 )       (337 )
Other multi-line           1,032       1,091          2,948       2,789           33           40          (175 )         31
                         $ 1,229     $ 1,383     $    5,526     $ 3,523     $    167       $ (166 )   $      79       $  (58 )

Premiums earned in the first nine months of 2009 from catastrophe and individual risk contracts declined $39 million (5%) versus the first nine months of 2008. The level of business written in a given period will vary significantly due to changes in market conditions and management's assessment of the adequacy of premium rates. In early 2009, management constrained the volume of business written in response to the decline in Berkshire's net worth that occurred in the first quarter of 2009. Though net worth has recovered significantly since then, management will continue to constrain the volume of business written in light of the pending BNSF acquisition (see Note 20 to the Consolidated Financial Statements for information regarding the pending acquisition). Also, premium rates have not been attractive enough to actually warrant increasing volume thus far in 2009. Underwriting results in 2009 reflected no significant catastrophe losses, while underwriting results in 2008 included approximately $350 million of estimated losses from third quarter hurricanes (Gustav and Ike). Underwriting results in the third quarter of 2009 reflect reductions of loss reserves primarily due to lower estimated ultimate losses from hurricanes in 2004 and 2005.

Premiums earned in the first nine months of 2009 from retroactive reinsurance included 2 billion Swiss Francs ("CHF") (approximately $1.7 billion) from an adverse loss development contract with Swiss Reinsurance Company Limited and its affiliates ("Swiss Re") covering substantially all of Swiss Re's non-life insurance losses and allocated loss adjustment expenses for loss events occurring prior to January 1, 2009. The Swiss Re contract provides aggregate limits of indemnification of 5 billion CHF in excess of a retention of Swiss Re's reported loss reserves at December 31, 2008 (58.725 billion CHF) less 2 billion CHF. The impact on underwriting results from this contract was negligible as the premiums earned were offset by a corresponding amount of losses incurred.

Retroactive policies generally provide very large, but limited, indemnification of unpaid losses and loss adjustment expenses with respect to past loss events that are generally expected to be paid over long periods of time. The underwriting losses from retroactive policies primarily represent the periodic amortization of deferred charges established at the inception of the contracts. At September 30, 2009, unamortized deferred charges were approximately $3.7 billion.

Premiums earned in the third quarter of 2009 from other multi-line business declined $59 million (5%) compared to 2008 and in the first nine months of 2009 increased $159 million (6%) versus 2008. Premiums earned in the third quarter and first nine months of 2009 included $717 million and $2,034 million, respectively, from a 20% quota-share contract with Swiss Re covering substantially all of Swiss Re's property/casualty risks incepting from January 1, 2008 and running through December 31, 2012. Premiums earned in 2008 from the Swiss Re contract were $496 million in the third quarter and $1,169 million in the first nine months. Excluding the Swiss Re quota-share contract, other multi-line business premiums earned in 2009 declined $280 million (47%) in the third quarter and $706 million (44%) versus 2008 periods, primarily due to significant reductions in aviation, property, workers' compensation and Lloyd's market volume.

Pre-tax underwriting results from other multi-line reinsurance in 2009 included foreign currency transaction gains of $60 million for the third quarter and $305 million of losses for the first nine months. The non-cash losses arose from the conversion of certain reinsurance loss reserves and other liabilities denominated in foreign currencies (primarily the U.K. Pound Sterling and the Euro). The value of these currencies rose relative to the U.S. Dollar over the first nine months of 2009, resulting in losses. In 2008, underwriting results included foreign currency transaction gains of approximately $360 million in the third quarter and approximately $315 million for the first nine months, resulting from declines in the Euro and U.K. Pound Sterling versus the U.S. Dollar. Underwriting results in the third quarter and first nine months of 2008 included estimated catastrophe losses of $535 million attributable to Hurricanes Gustav and Ike.

Insurance -Underwriting (Continued)

Berkshire Hathaway Primary Group

Premiums earned in 2009 by Berkshire's various primary insurers were $442 million in the third quarter and $1,353 million in the first nine months, representing declines of $32 million (7%) and $111 million (8%) compared to the corresponding 2008 periods, resulting from increased competition across virtually all market segments. For the first nine months, Berkshire's primary insurers produced underwriting gains of $40 million in 2009 and $98 million in 2008. Underwriting results in 2009 were lower than 2008 for most of the primary insurance operations due to higher loss ratios as increased price competition narrowed profit margins, and higher expense ratios, which reflected the impact of fixed costs on lower premium volume.

Insurance-Investment Income

A summary of net investment income of Berkshire's insurance operations follows.
Amounts are in millions.

                                                   Third Quarter            First Nine Months
                                                 2009         2008          2009          2008
Investment income before taxes,
noncontrolling interests and equity method
earnings                                       $  1,348     $  1,074     $    4,068     $  3,367
Income taxes and noncontrolling interests           483          265          1,207          872
Net investment income before equity method
earnings                                            865          809          2,861        2,495
Equity method earnings                              111            -            307            -
Net investment income                          $    976     $    809     $    3,168     $  2,495

Investment income consists of interest and dividends earned on cash equivalents and investments allocable to Berkshire's insurance businesses. Pre-tax investment income earned in the third quarter and first nine months of 2009 exceeded amounts earned in 2008 periods by $274 million and $701 million, respectively. The increases in investment income in 2009 primarily reflected earnings from several large investments made during the fourth quarter of 2008 and first half of 2009, partially offset by lower earnings on cash and cash equivalents due to lower short-term interest rates and lower average cash balances in 2009.

In October 2008, Berkshire subsidiaries acquired Wrigley, Goldman Sachs and General Electric securities for an aggregate cost of $14.5 billion and in March 2009, Berkshire invested 3 billion CHF in a 12% convertible perpetual instrument of Swiss Re. In addition, on April 1, 2009, Berkshire invested $3 billion in 8.5% Cumulative Convertible Perpetual Preferred Stock of The Dow Chemical Company. See Note 7 to the Consolidated Financial Statements. Interest and dividends from these securities will be approximately $2 billion per annum, which will produce comparative increases in investment income in 2009. Partially offsetting these increases will be reductions in dividends from Berkshire's investments in Wells Fargo and U.S. Bancorp common stock as a result of dividend rate cuts announced by those companies.

Beginning in 2009, investment income also includes earnings from equity method investments (BNSF and Moody's). Equity method earnings represents Berkshire's proportionate share of the net earnings of these companies. As a result of a reduction of ownership of Moody's in July of 2009, Berkshire discontinued the use of the equity method for its investment in Moody's as of the beginning of the third quarter. Dividends earned on equity method investments are not reflected in Berkshire's earnings. Dividends earned on equity method investments for the first nine months of 2009 were $102 million.

A summary of cash and investments held in Berkshire's insurance businesses follows. Amounts are in millions.

                              Sept. 30,      Dec. 31,      Sept. 30,
                                 2009          2008           2008
Cash and cash equivalents     $   16,147     $  18,845     $   21,957
Equity securities                 54,829        48,892         75,775
Fixed maturity securities         32,510        26,932         29,408
Other *                           31,927        21,535              -
                              $  135,413     $ 116,204     $  127,140

* Other investments include the investments in Wrigley, Goldman Sachs, General Electric, Swiss Re and Dow Chemical as well as the investment in BNSF, which beginning as of December 31, 2008 is accounted for under the equity method. Berkshire's investment in Moody's was accounted for under the equity method at December 31, 2008 but included in equity securities at September 30, 2009 and 2008. At September 30, 2008, the investment in BNSF was included in equity securities.

Insurance-Investment Income (Continued)

Fixed maturity securities as of September 30, 2009 were as follows. Amounts are
in millions.

                                                      Amortized       Unrealized         Fair
                                                        Cost         Gains/Losses        Value
U.S. Treasury, U.S. government corporations and
agencies                                             $     2,352     $          59     $   2,411
States, municipalities and political subdivisions          3,904               285         4,189
Foreign governments                                       11,124               374        11,498
. . .