A Record $334 Billion Cash Hoard Balloons at Berkshire Hathaway in the Fourth Quarter, as Operating Earnings Soar 71%

Berkshire Hathaway reported a significant increase in fourth-quarter operating earnings, largely driven by strong performance in its insurance business, while its cash reserves soared to record levels.

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The conglomerate, led by Warren Buffett, announced that its operating profit—reflecting earnings from its fully owned businesses—rose 71% to $14.53 billion in the final quarter of 2024. This surge was fueled by a 302% increase in insurance underwriting profits compared to the previous year, reaching $3.41 billion. Additionally, income from insurance investments climbed nearly 50% to $4.09 billion.

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For the entire year, operating earnings grew 27% to $47.44 billion, reflecting broad strength across the company’s core business segments.

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Buffett, in his annual letter to shareholders, acknowledged that Berkshire performed better than expected in 2024, even though 53% of its 189 operating businesses experienced a decline in earnings. He attributed much of the company’s success to a substantial increase in investment income, as higher Treasury bill yields boosted returns. Berkshire also increased its holdings of highly liquid, short-term securities, providing further support to its bottom line.

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"Our insurance business was a major contributor to this growth, especially through GEICO’s improved performance," Buffett said.

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Despite the positive results, Berkshire warned that wildfires in Southern California would result in an estimated pre-tax loss of approximately $1.3 billion for its insurance operations.

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Berkshire Hathaway’s cash holdings reached an unprecedented $334.2 billion by the end of 2024, up from $325.2 billion at the close of the third quarter. This substantial cash balance reflects Buffett’s ongoing challenge in identifying major investment opportunities that meet his strict criteria.

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In his letter, Buffett defended the company’s sizable cash position. "Although some commentators view our cash reserves as unusually large, the majority of your money is still invested in equities—a preference that will not change," he emphasized.

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While the value of Berkshire’s publicly traded stock holdings fell from $354 billion to $272 billion over the year, Buffett highlighted that the value of its privately held, non-public businesses increased and continues to exceed its stock portfolio. "Berkshire shareholders can be confident that we will always allocate the bulk of their capital to equities," he reassured.

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Investment gains slowed significantly in the fourth quarter, falling to $5.17 billion from $29.09 billion a year earlier. This decline reflects Berkshire’s reduced stock investments throughout 2024, including the sale of a portion of its Apple holdings.

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Berkshire consistently reminds investors that quarterly investment gains or losses can be volatile and do not always reflect the company’s long-term financial health. In its earnings release, the company noted, "The amount of investment gains or losses in any given quarter is usually meaningless and can present a misleading picture for investors unfamiliar with accounting rules."

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Berkshire’s total earnings for the fourth quarter fell 47% to $19.69 billion, down from $37.57 billion during the same period in 2023. For the full year, net earnings dropped 7.5% to $88.99 billion, compared to $96.22 billion the previous year.

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Despite the dip in overall profits, the company’s strong operating performance and rising cash reserves reflect a resilient business model. Buffett’s disciplined investment approach and commitment to long-term value creation remain key pillars of Berkshire’s strategy.

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As the company looks ahead, investors will be watching closely for signs of Buffett’s next major move and how the conglomerate continues to navigate an evolving economic landscape.

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