Warren Buffett before Berkshire Hathaway’s annual shareholders meeting in Omaha, Nebraska.
David A. Grogan | CNBC
Berkshire Hathaway on Saturday reported strong growth in fourth-quarter operating income, driven by huge gains in its insurance business, and cash flow increased to a record level.
The Omaha-based conglomerate posted operating income — which refers to profits from its insurance, railroad and utility businesses — of $8.481 billion for the quarter ended in December. This is 28% higher than $6.625 billion for the same period last year.
For the full year 2023, operating income rose to $37.350 billion, up 17% from $30.853 billion in the prior year.
Berkshire also held $167.6 billion in cash in the fourth quarter, a record level that exceeds the $157.2 billion the conglomerate held in the previous quarter.
Berkshire’s Class A shares are up about 16% this year.
Berkshire Hathaway Class A shares
Geico, the auto insurer considered “Buffett’s pet baby,” reported a profitable year, with net underwriting income of $5.428 billion in 2023. The increase in profit was driven by higher premium rates and lower claims last year.
Meanwhile, Burlington Northern Santa Fe (BNSF) reported full-year net income of $5.087 billion, down 14% from $5.946 billion in the prior year.
Insurance volume rose to $848 million in the fourth quarter, up 430% from $160 million year-over-year, boosting the conglomerate’s operating profit.
Insurance investment income also rose to $2.759 billion in the quarter, up 37% from $2.0 billion in the same period last year.
But railroads’ operating profit fell in the fourth quarter, as did utilities and energy. The railroad’s operating profit fell to $1.355 billion from $1.469 billion a year ago. Operating income in the Utilities and Energy business fell to $632 million from $739 million in the prior year.
Berkshire’s total income, which includes investment income from publicly traded companies, more than doubled in the quarter from a year earlier, reaching $37.57 billion. For the full year, total profit was $96.22 billion.
The conglomerate, however, included its usual disclaimer, advising investors to ignore fluctuations in quarterly results.
“We believe that investment gains and losses on investments in equity securities, whether realized as a result of dispositions or unrealized as a result of changes in market prices, are generally not meaningful in understanding our reported periodic results or assessing economic performance our operating business,” the magazine said in a statement. annual report.