The Blubber

Berkshire Hathaway saw a surge in earnings from its operating businesses, largely driven by its insurance segment, while its cash reserves soared to record highs.

The Warren Buffett-led conglomerate reported that operating profit—reflecting earnings from its wholly owned businesses—jumped 71% to $14.527 billion in the final quarter of 2024. This was fueled by a staggering 302% increase in insurance underwriting profits, which reached $3.409 billion. Additionally, insurance investment income surged nearly 50% to $4.088 billion.

For the full year, operating earnings climbed 27% to $47.437 billion.

“In 2024, Berkshire did better than I expected, even though 53% of our 189 operating businesses saw a decline in earnings. We benefited from a substantial and predictable rise in investment income as Treasury Bill yields improved, and we significantly increased our holdings in these highly liquid short-term securities,” Buffett, chairman and CEO of Berkshire, wrote in his annual letter to shareholders. “Our insurance business also delivered a major earnings boost, led by GEICO’s performance.”

However, Berkshire cautioned that the wildfires in Southern California are expected to result in a pre-tax loss of approximately $1.3 billion for its insurance operations.

Cash Holdings Exceed $330 Billion

Berkshire Hathaway ended 2024 with $334.2 billion in cash, up from $325.2 billion in the previous quarter. The growing cash pile underscores Buffett’s ongoing challenge in finding his next major investment opportunity.

In his letter, Buffett defended the company’s substantial cash reserves.

“Despite some commentators viewing Berkshire’s current cash position as extraordinary, the vast majority of your money remains invested in equities. That preference won’t change. While our holdings in marketable equities declined last year from $354 billion to $272 billion, the value of our non-quoted controlled equities increased slightly and remains far larger than the marketable portfolio,” he explained. “Berkshire shareholders can rest assured that we will always allocate a significant majority of their money to equities.”

Investment Gains Slow as Berkshire Trims Stock Holdings

Investment gains sharply decelerated in the fourth quarter, totaling $5.167 billion—down from $29.093 billion a year earlier. Throughout 2024, Berkshire trimmed its stock investments, including selling off a portion of its Apple stake.

Berkshire consistently emphasizes in its earnings reports that “the amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules.”

Total earnings for the quarter came in at $19.694 billion, marking a 47% decline from $37.574 billion in the same period the previous year. For the full year, net earnings stood at $88.995 billion, down 7.5% from $96.223 billion in 2023.