Warren Buffett’s Berkshire Hathaway on Saturday stated working revenue set a report within the fourth quarter and for the third straight calendar yr, bolstered by improved underwriting and better funding revenue in its insurance coverage companies.
A lot of that revenue got here from Berkshire’s huge money stake, which ended 2024 at a report $334.2 billion, twice as a lot as a yr earlier.
In his annual letter to Berkshire shareholders, the 94-year-old Buffett assured that Berkshire would like investing in companies to holding money.
However he additionally stated his Omaha, Nebraska-based conglomerate “did higher than I anticipated,” although 53% of its 189 working companies posted decrease earnings.
He attributed the advance partly to increased yields on U.S. Treasury payments, and enchancment on the Geico automotive insurer, which benefited from improved pricing and tighter underwriting as loss charges from accidents declined.
“These have been unbelievable numbers,” stated Thomas Russo, a accomplice at Gardner Russo & Quinn in Lancaster, Pennsylvania, which has owned Berkshire inventory because the Eighties. “You actually noticed the ability of Berkshire’s insurance coverage operations and investments.”
Buffett singled out Todd Combs, Geico’s chief government since 2020 and in addition a Berkshire funding supervisor, saying he has “reshaped Geico in a significant method” by rising effectivity and bettering underwriting, although extra work stays.
Geico minimize greater than 2,300 jobs final yr, and has shed about 10,000 jobs – 26% of its workforce – because the finish of 2022.
NO BUYBACKS
Working revenue rose 71% to $14.53 billion within the fourth quarter, and 27% to $47.44 billion in 2024.
Quarterly internet revenue totaled $19.69 billion, or $13,695 per common equal share, as the worth of Berkshire’s holdings in Apple, American Categorical and different shares elevated. For the yr, internet revenue totaled $89 billion.
Buffett considers internet outcomes deceptive as a result of they embody positive factors and losses on investments that Berkshire has not offered and generally has no plan to promote.
The elevated money stake in 2024 largely got here from $143.4 billion of inventory gross sales, together with 62% of Berkshire’s holdings in Apple and one-third of its stake in Financial institution of America.
Berkshire has been a internet vendor of shares for 9 consecutive quarters.
In the meantime, Berkshire spent simply $2.9 billion repurchasing its personal inventory in 2024. By way of February 10, it has carried out no repurchases since final Could.
Invoice Smead, a longtime Berkshire investor at Smead Capital Administration in Phoenix, famous Buffett’s remark within the annual letter that Berkshire solely “very occasionally” finds itself knee-deep in issues to purchase.
“He’s saying: nothing appears compelling,” Smead stated.
LOS ANGELES WILDFIRES
Geico’s pretax underwriting revenue rose 29% within the fourth quarter, and greater than doubled in 2024 as the share of premiums used to pay claims fell to 71.8% from 81% in 2023. Charge will increase offset a small decline within the variety of insurance policies.
Whereas general insurance coverage underwriting revenue quadrupled within the fourth quarter, Berkshire projected a $1.3 billion pre-tax hit from final month’s wildfires within the Los Angeles space.
Revenue on the BNSF railroad fell 6% within the fourth quarter and 1% in 2024.
Full-year revenue additionally declined in Berkshire’s retail and repair companies, as margins fell on the Pilot truck cease chain and at Berkshire’ namesake automotive dealership enterprise.
Revenue additionally declined at cell house unit Clayton Houses, reflecting increased insurance coverage claims and projected mortgage losses.
Full-year revenue at Berkshire Hathaway Power rose by greater than half as utility margins elevated, and the PacifiCorp utility put aside much less cash for litigation arising from Oregon and California wildfires in 2020.
Buffett disclosed that Berkshire paid $3.9 billion late final yr to purchase the 8% of Berkshire Hathaway Power it didn’t already personal.
Berkshire additionally owns a wide range of industrial firms, in addition to shopper manufacturers akin to Dairy Queen, Fruit of the Loom and See’s Candies.
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