Berkshire Hathaway Inc.’s operating earnings surged 71% in the fourth quarter, driven by higher interest rates lifting investment income and an improved insurance business. Operating earnings reached $14.5 billion, with a significant boost from insurance underwriting, which quadrupled to $3.4 billion.
GEICO, Berkshire’s main auto insurer, saw its pretax underwriting earnings more than double to $7.8 billion in 2024, thanks to the addition of new clients in the second half. Reinsurance businesses also showed a 44% growth over the past year.
The firm’s cash reserves grew for the 10th quarter in a row, reaching a record $334.2 billion at the end of 2024. Warren Buffett’s annual letter to shareholders noted that Berkshire will not prioritize owning cash over good businesses, but some analysts remain concerned about the company’s large cash hoard and potential implications for the US economy.
Buffett said Berkshire could increase its stakes in Japanese trading houses like Itochu, Marubeni, and Mitsui over time. However, this move may be limited by agreements with these companies to maintain a below 10% threshold.
Despite the strong earnings growth, Buffett pointed out that 53% of Berkshire’s operating companies reported a decline in earnings in 2024. This, combined with his decision not to buy back shares, suggests the billionaire may be cautious about the US economy.
Source: https://finance.yahoo.com/news/berkshire-hathaway-operating-profit-jumps-131131381.html