Berkshire Hathaway recently reported a significant increase in its operating earnings for the fourth quarter of the year. The conglomerate, based in Omaha, saw its operating earnings soar to $8.481 billion in the quarter ending December. This marks a 28% rise from the previous year’s $6.625 billion. Additionally, for the full year, operating earnings reached $37.350 billion, reflecting a 17% increase from $30.853 billion in the prior year. This spike in earnings was largely attributed to the huge gains in Berkshire’s insurance business.
In addition to the impressive earnings report, Berkshire Hathaway also set a record in cash holdings, with $167.6 billion in cash in the fourth quarter. This figure exceeded the previous quarter’s cash reserve of $157.2 billion. Furthermore, the conglomerate’s Class A shares experienced a significant 16% rally throughout the year, showcasing strong investor confidence in the company’s performance.
Berkshire’s Insurance Business Performance
Geico, the auto insurance arm often referred to as Buffett’s “favorite child,” reported a profitable year with net underwriting earnings of $5.428 billion in 2023. This positive outcome was driven by premium rate increases and a decrease in claims. On the other hand, Burlington Northern Santa Fe (BNSF) witnessed a 14% decline in full-year net earnings, dropping to $5.087 billion from $5.946 billion in the prior year. Despite this decrease, insurance underwriting saw a significant surge in the fourth quarter, jumping to $848 million from $160 million a year ago. Moreover, insurance investment income rose to $2.759 billion on a quarterly basis, up by 37% from the previous year’s $2.0 billion.
While Berkshire Hathaway’s insurance business thrived, its operating earnings from railroads and utilities faced challenges during the fourth quarter. Railroad operating earnings decreased to $1.355 billion from $1.469 billion the previous year, pointing to a declining performance in this sector. Similarly, operating earnings for utilities and energy dropped to $632 million from $739 million in the prior year. However, overall Berkshire earnings, which include returns from investments in publicly traded companies, more than doubled in the quarter to $37.57 billion, and totaled $96.22 billion for the full year.
Berkshire Hathaway’s recent earnings report showcases a mix of successes and challenges across its various business segments. While the insurance business saw remarkable growth, other sectors like railroads and utilities experienced a decline in earnings. The company’s record cash reserves and strong stock performance demonstrate investor confidence in Berkshire’s long-term prospects, despite the fluctuations in individual business units.