Warren Buffett was seen walking the floor at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, on May 3, 2024.
Berkshire Hathaway announced exciting news about its fourth-quarter earnings. The company’s operating profit rose by 71% to $14.5 billion, thanks largely to a strong performance in insurance. Insurance underwriting jumped a spectacular 302%, reaching $3.4 billion, and investment income from insurance grew by almost 50% to $4.1 billion. For the entire year, operating earnings rose 27% to $47.4 billion.
Buffett noted in his letter to shareholders, “In 2024, Berkshire did better than I expected. Even though over half of our 189 businesses saw earnings decline, growing investment income from Treasury Bills and a robust insurance sector helped our overall results.” He highlighted GEICO’s performance as a key driver of the insurance gains.
However, it’s not all positive news. Berkshire anticipates a pre-tax loss of around $1.3 billion from wildfires in Southern California that will impact its insurance business.
Berkshire’s cash holdings reached a staggering $334.2 billion by the end of 2024, up from $325.2 billion at the end of the third quarter. This surplus is significant as Buffett searches for his next major investment.
In his letter, Buffett explained the reasons behind the high cash reserve. He stated, “While some might see our large cash position as extraordinary, most of our funds are still invested in stocks. Our holdings in marketable equities dropped from $354 billion to $272 billion, but the value of our non-quoted equities has increased and remains substantial.” He reassured shareholders that a significant majority of their money would continue to be invested in equities.
Throughout the fourth quarter, Berkshire faced a notable slowdown in investment gains, reporting $5.2 billion compared to $29.1 billion in the previous year. The company reduced its stock investments during the year, including selling a portion of its shares in Apple.
It’s important to remember that Berkshire often states that investment gains or losses in a given quarter can be deceiving. The company warns that these figures can be misleading for those not familiar with accounting principles.
Overall, Berkshire’s total earnings for the fourth quarter were $19.7 billion, reflecting a 47% drop compared to $37.6 billion a year prior. For the full year, the company recorded earnings of $89 billion, a decline of 7.5% from $96.2 billion in 2023.
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