Buffett’s Berkshire Hathaway Posts Record Operating Profit on Insurance, Investments

New York: Warren Buffett’s Berkshire Hathaway Inc. posted its third consecutive record annual operating profit, driven by robust underwriting earnings, investment income, and a growing cash reserve.

The Omaha-based conglomerate ended 2024 with a record cash balance of $334.2 billion, more than double its position a year earlier. The company’s operating profit surged 27% year-over-year, reaching $47.44 billion, up from $37.35 billion in 2023.

In his annual letter to shareholders, Buffett acknowledged that Berkshire "did better than I expected", even as 53% of its 189 operating businesses posted lower earnings.

Much of the earnings boost came from:

• Higher interest rates on U.S. Treasury bills
• Improved profitability in insurance subsidiaries, particularly Geico, which benefited from better pricing and stricter underwriting policies

Fourth-Quarter Results Hit New Highs

Berkshire also posted a record fourth-quarter operating profit, surging 71% to $14.53 billion, or $1,010 per Class A share, compared to $8.48 billion in the same period last year.

The company’s quarterly net income reached $19.69 billion ($13,695 per share), primarily due to increased valuations of its investments in Apple, American Express, and other stocks.

For the full year, net income totaled $89 billion, though Buffett cautioned that these figures can be misleading due to unrealized stock gains and losses.

"Those were incredible numbers," said Thomas Russo, a partner at Gardner Russo & Quinn, which has held Berkshire stock since the 1980s. "You really saw the power of Berkshire's insurance operations and investments."

Massive Cash Reserves and Strategic Stock Sales

Berkshire’s cash pile ballooned to a record $334.2 billion, fueled by the sale of $143.4 billion in stocks. This included:

• 62% reduction in its Apple stake
• One-third of its Bank of America holdings

Notably, Berkshire has been a net seller of stocks for nine consecutive quarters, reflecting Buffett’s cautious investment approach amid high valuations and economic uncertainty.

Despite its cash surplus, Berkshire spent only $2.9 billion on share buybacks in 2024, with no repurchases since May.

Buffett reassured shareholders that while the company prefers investing in businesses over hoarding cash, attractive acquisition opportunities remain scarce.

Berkshire’s Business Portfolio: Strong But Mixed Performance

Beyond its massive stock holdings, Berkshire Hathaway operates a diverse range of businesses, including:

• BNSF Railway (one of the largest freight rail networks in the U.S.)
• Industrial and chemical companies
• Retail and real estate ventures, including Dairy Queen, Fruit of the Loom, and See’s Candies

However, more than half of Berkshire’s 189 subsidiaries reported lower earnings, reflecting broader economic headwinds.

Outlook: Buffett’s Cautious Approach Amid Market Uncertainty

Despite the record-breaking financial results, Buffett remains cautious about the future. He emphasized that higher Treasury yields and insurance gains were key drivers of growth, while many core businesses struggled.

With its massive cash reserves, Berkshire is well-positioned for future acquisitions, but Buffett’s careful approach to investments suggests the company will continue to prioritize value over aggressive expansion.

As Berkshire Hathaway’s annual shareholder meeting approaches, investors will be watching closely for Buffett’s insights on market conditions and future investment strategies.