Warren Buffett's Berkshire Hathaway Inc. reported a rise in operating income as higher interest rates and fewer catastrophes helped the conglomerate's insurance business.
The company reported fourth-quarter operating income of $8.48 billion, up from $6.63 billion in the same period last year. The results were supported by an increase in insurance income and investment income amid higher interest rates and milder weather. The company's cash on hand also hit a new record of $167.6 billion as the billionaire investor continued to face a lack of major deals.
Because of the expansive nature of its businesses – from railroad BNSF to Geico to Dairy Queen – Berkshire's profits are always closely watched as an indicator of U.S. economic health. That also makes the company particularly vulnerable to higher interest rates, which can dampen demand, and Buffett warned in May last year that profits would fall across most of its businesses in 2023, an “incredible time” for the U.S. economy comes to an end.
“Our insurance business performed exceptionally well last year, setting records for revenue, float and underwriting profit,” Buffett said in his annual letter to shareholders, which the company released Saturday along with its results. “We have a lot of room to grow.”
This is the first time Berkshire has reported earnings since Charlie Munger, a Berkshire vice president and a longtime investment partner of Buffett, died in late November at the age of 99. Buffett devoted much of the letter to praising Munger's role in founding the sprawling company.
Although Berkshire has stepped up its acquisition machine in recent years, the company is still struggling to find many of the big deals that boosted Buffett's reputation and gave him more money than he and his investment representatives could quickly deploy.
After keeping a low profile during the pandemic, he has since bought shares in Occidental Petroleum Corp. and an $11.6 billion deal to buy Alleghany Corp. completed. The investor also increased Berkshire's stakes in five Japanese trading houses last year after their profits soared – a move that sparked a rally in their shares. Given the lack of attractive alternatives, Buffett continued to rely on share buybacks, saying the measures would benefit shareholders.
Including investments and derivatives, Berkshire posted net income of $37.6 billion in the quarter, up from a year earlier, helped by higher interest rates. Berkshire often recommends investors look past investment gains or losses tied to accounting standards because they can be misleading.
In the absence of major deals, Buffett continued to rely on stock buybacks, which he said benefited shareholders. The company spent $2.2 billion on repurchases in the fourth quarter, bringing its total for the year to about $9.2 billion.
The company reported fourth-quarter operating income of $8.48 billion, up from $6.63 billion in the same period last year. The results were supported by an increase in insurance income and investment income amid higher interest rates and milder weather. The company's cash on hand also hit a new record of $167.6 billion as the billionaire investor continued to face a lack of major deals.
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Because of the expansive nature of its businesses – from railroad BNSF to Geico to Dairy Queen – Berkshire's profits are always closely watched as an indicator of U.S. economic health. That also makes the company particularly vulnerable to higher interest rates, which can dampen demand, and Buffett warned in May last year that profits would fall across most of its businesses in 2023, an “incredible time” for the U.S. economy comes to an end.
“Our insurance business performed exceptionally well last year, setting records for revenue, float and underwriting profit,” Buffett said in his annual letter to shareholders, which the company released Saturday along with its results. “We have a lot of room to grow.”
This is the first time Berkshire has reported earnings since Charlie Munger, a Berkshire vice president and a longtime investment partner of Buffett, died in late November at the age of 99. Buffett devoted much of the letter to praising Munger's role in founding the sprawling company.
Although Berkshire has stepped up its acquisition machine in recent years, the company is still struggling to find many of the big deals that boosted Buffett's reputation and gave him more money than he and his investment representatives could quickly deploy.
After keeping a low profile during the pandemic, he has since bought shares in Occidental Petroleum Corp. and an $11.6 billion deal to buy Alleghany Corp. completed. The investor also increased Berkshire's stakes in five Japanese trading houses last year after their profits soared – a move that sparked a rally in their shares. Given the lack of attractive alternatives, Buffett continued to rely on share buybacks, saying the measures would benefit shareholders.
Expand
In the absence of major deals, Buffett continued to rely on stock buybacks, which he said benefited shareholders. The company spent $2.2 billion on repurchases in the fourth quarter, bringing its total for the year to about $9.2 billion.
