Berkshire Hathaway, the conglomerate led by legendary investor Warren Buffett, has reported a significant increase in operating earnings for the fourth quarter of 2023. The company’s insurance business played a crucial role in driving these gains, leading to a record-high cash pile for Berkshire.
In the quarter ending December, Berkshire Hathaway recorded operating earnings of $8.481 billion, marking a 28% increase compared to the same period in the previous year. This strong performance contributed to the full-year operating earnings of $37.350 billion, representing a 17% rise from the prior year.
One of Berkshire’s standout performers was Geico, the auto insurer often referred to as Buffett’s “favorite child.” Geico reported net underwriting earnings of $5.428 billion in 2023, driven by premium rate increases and lower claims. This success further solidifies Geico’s position as a key contributor to Berkshire’s overall profitability.
However, not all sectors within Berkshire experienced positive results. Burlington Northern Santa Fe (BNSF), the company’s railroad subsidiary, reported a 14% drop in net earnings for the full year, falling from $5.946 billion to $5.087 billion. Similarly, operating earnings from railroads and utilities and energy declined in the fourth quarter.
Despite these setbacks, Berkshire Hathaway’s overall earnings, which include investment gains from publicly traded companies, more than doubled during the quarter compared to the previous year, reaching an impressive $37.57 billion. Furthermore, the conglomerate’s total profits for the full year amounted to $96.22 billion.
It is worth noting that Berkshire Hathaway included a disclaimer in its annual report, advising investors to look beyond fluctuations in quarterly results. The company emphasized that investment gains and losses on equity securities should not be the sole focus when evaluating its economic performance.
The strong financial performance of Berkshire Hathaway has had a positive impact on its stock price. Berkshire Class A shares have rallied approximately 16% since the beginning of the year, reflecting investor confidence in the company’s ability to generate consistent profits.
Overall, Berkshire Hathaway’s impressive operating earnings and record cash pile demonstrate the conglomerate’s resilience and ability to navigate various sectors successfully. With Warren Buffett at the helm, Berkshire continues to be a force to be reckoned with in the business world.