Berkshire Hathaway Chairman Warren Buffett has told shareholders “the party is over” for insurers’ profit margins after the company posted an 18% dip in fourth-quarter earnings last week.

Berkshire Hathaway owns reinsurer Gen Re and insurers Geico and National Indemnity.

The company recorded net income of $US2.95 billion ($3.16 billion) in last year’s final quarter, down from $US3.58 billion ($3.83 billion) in the previous corresponding period.

Insurance premium revenue climbed 33% to $US31.78 billion ($34 billion), but underwriting profit slid 12% to $US3.37 billion ($3.6 billion).

In a letter to shareholders, Mr Buffett says although the company’s insurance businesses had an excellent year, “insurance industry profit margins, including ours, will fall significantly in 2008”.

Mr Buffett attributes declining income to low premiums and rising exposures.