Berkshire Hathaway experienced a significant upturn in 2024, marked by a notable 25% rise in its Class A shares. The conglomerate's operating earnings surged 27% for the year, totaling $47.437 billion. The fourth quarter of 2024 was particularly impressive, with operating profits skyrocketing 71% to $14.527 billion. This remarkable growth reflects the company's strategic positioning and robust performance across various sectors.
A key contributor to Berkshire Hathaway's success was its insurance division, which saw a dramatic increase in earnings. Insurance investment income nearly doubled, reaching $4.088 billion. Insurance underwriting also rose significantly, with a 302% increase from the previous year, totaling $3.409 billion. This growth was largely driven by GEICO's outstanding performance, as noted by Warren Buffett in his annual letter to shareholders.
"Our insurance business also delivered a major increase in earnings, led by the performance of GEICO." – Warren Buffett
Despite these achievements, Berkshire Hathaway faced some challenges. Over half of its 189 operating businesses reported a decline in earnings in 2024. Additionally, the company's ownership in marketable equities decreased from $354 billion to $272 billion over the year. Nonetheless, the non-quoted controlled equities maintained a higher value than the marketable portfolio.
The company's cash reserves reached an extraordinary $334.2 billion by the end of 2024, an increase from $325.2 billion at the end of the third quarter. This substantial cash position drew attention from commentators, highlighting Berkshire Hathaway's financial strength and strategic flexibility. Warren Buffett defended these large cash holdings, emphasizing the company's commitment to deploying shareholder money wisely.
"Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities." – Warren Buffett
Berkshire Hathaway capitalized on improved Treasury Bill yields by increasing its holdings of these short-term securities, contributing to the predictable rise in investment income. However, the company warned of an estimated pre-tax loss of $1.3 billion due to wildfires in Southern California impacting its insurance business.
Despite the company's strong financial position, Warren Buffett struggled to identify his next major investment target. This challenge underscores the difficulty of sustaining growth at such a scale while maintaining high investment standards.
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