Nov. 7 (Bloomberg) -- Billionaire investor Warren Buffett's Berkshire Hathaway Inc. may post a fourth straight drop in quarterly net income, the longest streak of declines in at least 13 years, on falling profit at its insurance businesses.

The most costly hurricane season since 2005 and lower prices for commercial coverage may weigh on results at Berkshire, which typically gets about half its revenue from insurance. The Omaha, Nebraska-based company's housing-related businesses and investment holdings may also slump.

Buffett has committed at least $28 billion this year to acquire companies, finance buyouts and purchase securities for Berkshire as prices fall and competitors are hobbled by limited access to credit. Buffett, who said he's buying U.S. stocks with his own money amid the market decline, is deploying Berkshire's cash in industries including investment banking, chewing gum and nuclear power while insurance earnings fall.

``Hurricanes Ike and Gustav have not been overly kind to insurance companies as they report third quarter results, and there's no reason to think that Berkshire would be any different,'' said Tom Kersting, an analyst at Edward Jones & Co. Berkshire units selling paint, carpet and manufactured homes ``are going to be affected by the slowing economy,'' he said.

Berkshire is scheduled to disclose results today after the close of regular trading on the New York Stock Exchange. Twenty two of the companies in the KBW Insurance Index have posted a third-quarter loss or earnings decline, compared with one, Cincinnati Financial Corp., which had a profit gain.

Certain Decline

Buffett, 78, warned investors in February that it was a ``certainty'' that profit margins at Berkshire's insurance businesses would fall.

He scaled back insurance sales in areas prone to natural disasters as rivals drive down prices for property coverage. Rates spiked following Hurricane Katrina in 2005, and competitors retreated from coastal areas for a time, allowing Berkshire to increase premium revenue. ``That party is over,'' Buffett wrote in his letter to shareholders that accompanied the firm's 2007 results.

``He's telegraphed for some time that insurance earnings would be down,'' said Julius Ridgway, a financial adviser at Medley & Brown in Jackson, Mississippi, which owns Berkshire shares. ``Pricing has been weak across the insurance industry.''

Ike and Gustav cost insurers a combined $10 billion when they struck the Gulf Coast in September, the most since Katrina contributed to a record $58.7 billion of claims in 2005, according to preliminary data from Insurance Services Office Inc. Gustav struck Louisiana on Sept. 1, sparing New Orleans a direct hit. Ike smashed into Galveston, Texas, two weeks later.

Natural Disasters

``Berkshire premiums were down significantly for the first six months of the year,'' said Bill Bergman, an analyst for Morningstar Inc. in Chicago. ``Still, covering catastrophes is what they do, and losses sometimes come with the territory.''

Buffett, the world's preeminent stock picker, has said he likes to own insurance companies because they are able to invest money paid by policyholders for months or years until the funds are needed to pay claims. Buffett in the past two months agreed to spend $5 billion of Berkshire's cash for a stake in Goldman Sachs Group Inc., betting the Wall Street firm would be among the survivors of a worldwide credit crisis, and another $5 billion in preferred shares of General Electric Co.

He also agreed in July to lend $3 billion to Dow Chemical Co. to help fund that firm's takeover of Rohm & Haas Co., and committed $6.5 billion in April to help Mars Inc. buy chewing gum maker Wm. Wrigley Jr. Co. Berkshire's MidAmerican Energy Holdings Co. struck a deal in September to pay $4.7 billion for Constellation Energy Group Inc.

Stock Slump

Berkshire rose $800, or 0.7 percent, to $113,000 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have fallen 20 percent since Dec. 31 as some of the firm's largest stock investments slumped. Wells Fargo & Co. dipped 2.3 percent this year, Coca-Cola Co. plunged 25 percent and Procter & Gamble Co. dropped 12 percent. Berkshire's stock advanced in 17 of the past 20 years.

Investment gains helped Berkshire last year when third- quarter net income surged 64 percent from the same period in 2006 to $4.55 billion on profits from selling a stake in energy firm PetroChina Co.

This year's third-quarter results may include accounting losses from derivatives, Kersting said, citing deals in which Buffett agreed to pay investors if stock indexes fall below contractually agreed-upon levels at expiration dates between 2019 and 2027.

`Big Bets'

``Berkshire has always been known for the volatility of their earnings because they take big bets,'' said Damien Magarelli, a credit analyst for Standard & Poor's in New York. ``Over the long term, they've made substantial profits.''

The worst housing slump since the Great Depression has weighed on results at Berkshire units, including carpet manufacturer Shaw Industries, Acme Brick and Benjamin Moore paints. Construction of new single-family homes declined 32 percent in the third quarter from a year earlier, according to the U.S. Commerce Department. Housing starts reached a 26-year low in September.

Buffett built Berkshire over four decades from a failing textile maker into a $175 billion company by buying out-of-favor stocks and businesses whose management he deemed superior.

To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.

Last Updated: November 7, 2008 16:24 EST