OMAHA, Nebraska (Bloomberg) ? Berkshire Hathaway Inc., the insurance and investment company run by billionaire Warren Buffett, said fourth-quarter earnings were little changed because of claims from a record hurricane season.

Buffett, 75, also said his board has selected someone to eventually replace him as chief executive officer of the insurance and investment company. The board chose from three ?reasonably young? managers at the company, Buffett said in his annual letter to shareholders on Saturday. He didn?t identify them or discuss the timing of succession.

Berkshire?s profit before investment gains was $1.84 billion, or $1,196 a share, about the same as a year ago and higher than analysts expected. An increase in interest income cushioned claims from storms including Hurricane Wilma. Buffett cut his bet against the US dollar after the company?s first annual loss from foreign currency investments.

?Considering the terrible year for catastrophe insurance, this is a good performance,? said Frank Betz, who manages $100 million at Warren, New Jersey-based Carret Zane Capital Management LLC, including Berkshire shares. The statement on succession ?was needed and will be comforting to many investors?, he said.

Investors have said possible successors include David Sokol, 49, CEO of Berkshire?s MidAmerican Energy Holdings Co.; Joseph Brandon, 47, CEO of reinsurer General Re Corp.; Ajit Jain, 54, head of Berkshire?s remaining reinsurance business; Tony Nicely, 62, CEO of the company?s Geico Corp. car insurance unit; and Richard Santulli, 61, who runs NetJets Inc.

?Berkshire?s board has fully discussed each of the three CEO candidates and has unanimously agreed on the person who should succeed me if a replacement were needed today,? Buffett, who took control in 1965, said in the letter.

?The directors know now ? and will always know in the future ? exactly what they will do when the need arises.?

Berkshire?s fourth-quarter revenue rose 27 percent to $25.4 billion. Net income climbed 54 percent to $5.13 billion, or $3,330 a share, because of a $3.25 billion non-cash gain from the company?s stake in Gillette Co.

Per-share profit excluding investment gains beat the $900 estimate of Charles Gates, an analyst at Credit Suisse Group in New York.

The company had been Gillette?s largest shareholder before Procter & Gamble Co.?s October acquisition of the razor maker. The gain was required by generally accepted accounting principles and is ?meaningless from an economic standpoint?, Buffett wrote.

Net income for the full year increased 17 percent to $8.53 billion, or $5,538 a share. Earnings before investment gains fell one percent to $5 billion. On that basis, it was the second straight annual decline, the worst streak for Buffett in at least two decades.

US insurers probably paid homeowners and businesses a record $56.8 billion for 2005 hurricanes and other catastrophes, more than twice the annual record, Insurance Services Office Inc. said in January.

At Berkshire, Hurricanes Katrina, Rita and Wilma triggered $3.4 billion in pre-tax claims in 2005, including $400 million in the fourth quarter.

The losses have the company reconsidering the prices it must charge for catastrophe policies, Buffett said.

?We?ve concluded that we should now write mega-cat policies only at prices far higher than prevailed last year,? he wrote in the report.

?To a lesser degree, we felt this way after 2004 ? and cut back our writings when prices didn?t move. Now our caution has intensified.?

Berkshire depends on its insurance units for more than half of profit. Fourth-quarter earnings from insurance underwriting dropped 18 percent to $502 million, after taxes, while interest and other investment income climbed 7.2 percent to $672 million.

Results were hurt by Berkshire Reinsurance Group and General Re while Geico, which gained market share in 2005, posted an increase.

Geico is ?just doing fabulous?, said Keith Trauner, who helps manage $3.3 billion at Fairholme Capital Management in Short Hills, New Jersey, including Berkshire shares. ?They keep chipping away a little share every year.?

Profit in Berkshire?s non-insurance businesses, which include mobile-home maker Clayton Homes, rose 12 percent to $580 million, after taxes. Quarterly figures were derived by subtracting results for the first nine months from yearly numbers.

Buffett reduced the company?s foreign currency forward contracts to $13.8 billion from $16.5 billion in September, after the dollar?s value strengthened against currencies including the euro, yen and British pound. A year ago, the bet was $21.4 billion.

Berkshire had $58 million in pretax losses on the investments in the fourth quarter, contributing to $955 million in losses for the year.

Buffett, who made $2.96 billion on the wager between 2002 and 2004, is betting the trade deficit will weaken the nation?s currency. Forward contracts are agreements to purchase a foreign currency in the future at a preset price.

?We reduced our direct position in currencies somewhat during 2005,? Buffett wrote. ?We partially offset this change, however, by purchasing equities whose prices are denominated in a variety of foreign currencies and that earn a large part of their profits internationally?.

The underlying factors affecting the current account deficit continue to worsen, he wrote.

?Not only did our trade deficit ? the largest and most familiar item in the current account ? hit an all-time high in 2005, but we also can expect a second item ? the balance of investment income ? to soon turn negative.?

Under Buffett, Berkshire?s stock fell 2.4 percent in the past year and has produced below-average returns since 2001. The shares climbed 20 percent in the past four years, trailing the 22 percent advance of the KBW Insurance Index and the 28 percent gain in the New York Stock Exchange Composite Index.

Buffett, labelled ?the world?s greatest investor? in Robert Hagstrom?s 1994 biography, created a $135 billion holding company from a failing textile manufacturer by acquiring out-of-favour securities and businesses with cash generated from insurance premiums.