Stockwatch

The week's winners
Domestic & General up 6.6%
Hardy Underwriting up 0.9%

The week's losers
Culver down 22.2%
Royal & SunAlliance down 13.3%
Zurich Financial Services down 13.3%

Warren Buffett doesn't mince his words.

"In all respects, 2002 was a banner year," he said, in his letter to Berkshire Hathaway shareholders last week.

The man known as the Sage of Omaha for his canny investment decisions showed this week why he still deserves the title.

Berkshire Hathaway, the chosen vehicle in his journey to become the world's second richest man, reported record profits at $4.29bn (£2.68bn), up from $795m (£496m) in 2001.

Buffett's "banner year" and its 43% profit increase was largely attributable to rising insurance rates. As he said himself: "Berkshire's reinsurance division and GEICO [the sixth largest motor insurer in the US] shot the lights out in 2002, and underwriting discipline was restored at General Re."

But Buffett's comments weren't all positive. He said one major reinsurer, which he left unnamed, had all but stopped paying claims, prompting a mass of speculation as to its identity.

He also said reinsurance, and derivatives, were like Hell: "Both are easy to enter and almost impossible to exit."

Royal & SunAlliance UK chief Duncan Boyle must wish 2002 had been a "banner year" for R&SA.

Its equivalent to Buffett's reinsurance was personal lines. Having found it easy to get into, R&SA is working very hard to exit its unprofitable parts.

Boyle told Insurance Times: "This was always going to be the greatest stress point."

If R&SA loses its place in the FTSE100, as seems almost impossible to avoid, he may come to believe he spoke too soon.