Berkshire Hathaway, led by legendary investor Warren Buffett, recently released its fourth-quarter earnings report, showcasing impressive growth in its operating businesses, particularly in the insurance sector. The conglomerate reported a staggering 71% increase in operating profit to $14.527 billion for the final quarter of 2024. This surge was mainly driven by a remarkable 302% jump in insurance underwriting to $3.409 billion, along with a nearly 50% increase in insurance investment income to $4.088 billion.
Overall, Berkshire Hathaway’s operating earnings for the full year also saw a substantial 27% increase, reaching $47.437 billion. Buffett attributed the strong performance to a significant gain in investment income due to improved Treasury Bill yields and increased holdings in short-term securities. He also highlighted the outstanding earnings growth in the insurance business, particularly citing the exceptional performance of GEICO.
However, Berkshire Hathaway did acknowledge potential challenges ahead, noting that the wildfires in Southern California would likely result in an estimated pre-tax loss of about $1.3 billion for its insurance operations.
One of the standout figures from the earnings report was Berkshire’s cash holdings, which reached a record high of $334.2 billion by the end of 2024, up from $325.2 billion in the previous quarter. Despite criticism over the large cash position, Buffett defended the decision, emphasizing that the majority of the company’s assets remain in equities. He assured shareholders that Berkshire would continue to deploy a significant portion of their funds into equities, even as the marketable equity portfolio decreased from $354 billion to $272 billion.
Investment gains for Berkshire slowed significantly in the fourth quarter, dropping to $5.167 billion from $29.093 billion in the same period the year before. The company also reduced its stock investments throughout the year, including selling a portion of its Apple stake. Despite the decrease in investment gains, Berkshire’s total earnings for the quarter totaled $19.694 billion, a 47% decline from the previous year. For the full year, the company reported a bottom line of $88.995 billion, down 7.5% from the previous year’s total of $96.223 billion.
Overall, Berkshire Hathaway’s fourth-quarter earnings report highlighted the company’s resilience and continued focus on long-term value creation, despite facing challenges in the current economic environment. The conglomerate’s solid performance in its operating businesses and strategic investment decisions under Warren Buffett’s leadership position it well for future growth and success.
