OMAHA, Neb. (AP) — Second-quarter profits at Warren Buffett's Berkshire Hathaway Inc. fell 9 percent because of bigger paper losses on derivatives the company sold, but many of its subsidiaries performed well.

The company reported that profits were up in Berkshire's insurance units. And business improved at the conglomerate's utility, railroad, manufacturing and retail businesses.

"It was obviously a solid rebound in insurance, but what was really terrific was the non-insurance subsidiaries," said David Rolfe, chief investment officer at Wedgewood Partners, which invests in Berkshire.

The Burlington Northern Santa Fe railroad added $802 million to Berkshire's net income this year, up from $690 million a year ago. Revenue at the railroad grew about 6 percent thanks to fuel surcharges and a 2 percent increase in total shipping volume. More shipments of consumer goods and industrial products offset weak coal demand.

The addition of specialty chemical maker Lubrizol, which Berkshire acquired last September, also helped profits. Lubrizol added $322 million to Berkshire's pretax profits in the quarter. That helped Berkshire's manufacturing, service and retail unit generate just over $1 billion net income, up from $789 million last year.

Berkshire also said its housing-related business — which include Shaw carpet, Acme Brick, numerous real estate brokerages and the Nebraska Furniture Mart — all showed improvement in the second quarter.

Jeff Matthews, an investor who wrote "Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett," said Berkshire recorded a good quarter overall with no big surprises.

Matthews said even though Berkshire's housing-related businesses improved, many of its other manufacturing and retail units reported weaker demand. That raises concerns about the strength of the overall economy.

Berkshire officials do not typically comment on quarterly earnings reports, and they did not immediately respond to a message Friday afternoon.

The lack of major catastrophes in the world this year helped Berkshire's insurance companies, which include Geico and several reinsurance firms, improve significantly. Last year, Berkshire's insurance companies incurred $1.2 billion in catastrophe losses related to the earthquakes in Japan and New Zealand and other weather losses in the U.S. and Australia.

Berkshire's insurance companies added $619 underwriting profit this year, compared to a $7 million underwriting loss last year.

Berkshire said it generated $3.1 billion net income, or $1.25 per Class B share. That's down from last year's second quarter net income of $3.4 billion, or $1.38 per Class B share. And last year's quarter was helped by a one-time $1.25 billion gain.

The results topped the $1.19 per share Wall Street was expecting, according to a FactSet survey.

Berkshire's revenue grew slightly to $38.5 billion from $38.3 billion.

Buffett has said it's better to look at Berkshire earnings without the derivative losses and investment gains. He says Berkshire's investment and derivative gains or losses can be misleading because the company rarely sells its investments.

Berkshire reported a 37 percent increase in its operating profit. Berkshire reported $3.7 billion in operating earnings, or $1.50 per Class B share. That's up from $2.7 billion, or $1.09 per Class B share, last year. Continued...