Berkshire's Operating Profit Soars as Cash Reserves Break Records

Berkshire Hathaway ended 2024 with a major surge in operating earnings, driven by a stellar performance in insurance, while its cash reserves swelled to a record-breaking $334.2 billion. 

The conglomerate, led by Warren Buffett, saw operating profit jump 71% in the fourth quarter to $14.53 billion, with insurance underwriting profits skyrocketing 302% year-over-year to $3.41 billion. Investment income from insurance operations also saw a substantial 50% rise, reaching $4.09 billion.

For the full year, Berkshire’s operating earnings climbed 27% to $47.44 billion, bolstered by rising Treasury yields and a strategic increase in short-term securities holdings. 

Buffett acknowledged that 53% of Berkshire’s 189 businesses saw earnings decline, but the overall gains in insurance and investment income more than offset these weaknesses. GEICO, in particular, posted strong results, contributing significantly to the company’s bottom line.

However, not all news was positive. The company warned of an estimated $1.3 billion pre-tax loss due to wildfires in Southern California, a blow to its insurance division. 

What Does This Mean for Me?

Over the course of 2024, Berkshire reduced its stock holdings, including a notable cut in its Apple stake, as the company recalibrated its portfolio.

Despite holding over $330 billion in cash, Buffett defended the strategy, emphasizing that Berkshire remains primarily invested in equities. While total earnings fell 47% in Q4 to $19.69 billion and ended the year down 7.5% at $88.99 billion, Berkshire’s financial strength remains formidable, positioning it well for future opportunities.