New York: Berkshire Hathaway Inc., under the leadership of Warren Buffett, has announced a significant increase in operating earnings for the fourth quarter, fueled by higher interest rates and fewer catastrophes affecting the conglomerate’s insurance arm. Operating earnings for the quarter surged to $8.48 billion, up from $6.63 billion in the same period last year. The positive performance is credited to improved earnings in insurance underwriting and investment income, boosted by higher interest rates and favorable weather conditions.
The firm’s cash reserves soared to a new high of $167.6 billion, underscoring Buffett’s struggle to find substantial investment opportunities. Despite Berkshire’s ongoing pursuit of acquisitions, Buffett has encountered challenges in securing large-scale deals that have characterized his investment strategy.
With diverse holdings including railroad BNSF, Geico, and Dairy Queen, Berkshire serves as a key barometer of the U.S. economy’s overall health. The conglomerate’s sensitivity to interest rate changes is noteworthy, and Buffett has cautioned that earnings across its operations may decline in 2023 as the extraordinary economic period in the U.S. wanes.
In his annual shareholder letter released alongside the earnings report, Buffett lauded Berkshire’s insurance business for its exceptional performance in the past year, achieving record sales, float, and underwriting profits. He expressed confidence in the company’s future growth prospects.
This earnings announcement marks the first since the passing of Charlie Munger, Berkshire’s vice chairman and Buffett’s long-standing investing partner, in November. Buffett dedicated a significant portion of the letter to honoring Munger’s pivotal role in building the conglomerate.
Despite Berkshire’s intensified efforts to pursue acquisitions, the company has struggled to secure high-profile deals, resulting in an excess of cash that cannot be swiftly deployed. In response, Buffett has turned to share repurchases, spending $2.2 billion on buybacks in the fourth quarter alone, totaling approximately $9.2 billion for the year.
