Warren Buffett’s Berkshire Hathaway Q4 profit surges 71% to $14.53 billion on insurance income amid high interest rates

Berkshire Hathaway Q4 Results: Warren Buffett’s Berkshire Hathaway Inc announced its fourth quarter results on Saturday, February 22, reporting a surge of 71 per cent in its operating profit to $14.5 billion, mostly driven by the investment income and insurance business amid high interest rates.

The multinational conglomerate reported its third straight record annual operating profit, bolstered by large increases in underwriting earnings. The Omaha, Nebraska-based empire’s fourth-quarter operating profit hit a record $14.53 billion, or  $1,010 per Class A share, from $8.48 billion a year earlier, reflecting gains in its insurance operations and foreign currency changes.

The increase in operating earnings was driven by a 48 per cent jump in insurance investment income to $4.1 billion. The operating profit rose 27 per cent to $47.44 billion in 2024 from $37.35 billion a year earlier. The quarterly net income was $19.69 billion, or $13,695 per average equivalent share, with the value of Berkshire’s holdings in Apple and American Express increasing.

Berkshire Hathaway Q4 Results: Key Metrics

For the year, net income totalled $89 billion. The rise in earnings also got a significant boost from a strong recovery in the firm’s insurance underwriting business, with operating earnings quadrupling over the period to $3.4 billion.

In his annual letter to Berkshire shareholders, Buffett assured them that Berkshire would prefer to invest in businesses to hold cash. But he also said his conglomerate “did better than I expected,” though 53 per cent of its 189 operating businesses posted lower earnings. He attributed the improvement partly to higher yields on US Treasury bills and improvement at the Geico car insurer, which benefited from improved pricing and tighter underwriting.

GEICO was the main contributor to Berkshire’s insurance results, with its pretax underwriting earnings more than doubling to $7.8 billion in 2024. The auto insurer successfully added new clients in the second half, reversing a years-long trend that previously weighed on its performance. Berkshire expects pretax losses of $1.3 billion from the wildfires ravaging Los Angeles last month.

Buffett’s cash hoard grew for the 10th quarter in a row to a record $334.2 billion at the end of 2024, up from $325.2 billion at the end of the third quarter. The billionaire continued to refrain from major stock transactions in the fourth quarter. The firm was a net seller of $6.7 billion worth of shares in the period.

The increase in Berkshire’s cash stake in 2024 largely came from the sale of $143.4 billion of stock, including 62 per cent of Berkshire’s holdings in Apple and one-third of its stake in Bank of America. It declined to buy back its own shares for the second quarter in a row, a sign that Buffett believes the stock trades above its intrinsic value.

Berkshire’s businesses include the BNSF railroad, industrial parts and chemical companies, a big real estate brokerage, and retail brands such as Dairy Queen ice cream, Fruit of the Loom underwear, and See’s candies. Since last month, Berkshire’s market capitalization has been hovering above $1 trillion.