Berkshire Hathaway Reports Record Operating Earnings in 2024: Key Takeaways for Investors

Warren Buffett's Berkshire Hathaway (NYSE: BRKa, BRKb) delivered record operating earnings in 2024, fueled by a strong insurance business and higher investment income. The conglomerate's cash reserves hit an all-time high of $334.2 billion, highlighting its financial strength amid market uncertainties.

With Buffett confirming that Greg Abel will soon take over as CEO, investors are watching closely as Berkshire prepares for its next chapter.

Key Financial Highlights

1. Operating Earnings Hit a Record High

• Full-year operating earnings surged 27% to $47.4 billion (up from $37.4 billion in 2023).
• Q4 operating earnings jumped 71% to $14.5 billion, exceeding analyst expectations.

2. Insurance Businesses Led the Growth

• Insurance underwriting profit more than doubled to $9 billion, driven by a turnaround at GEICO.
• Investment income surged 43% to $13.7 billion, benefiting from higher interest rates on short-term Treasuries.

3. Cash Reserves at Record $334.2 Billion

• Berkshire continues to pile up cash, signaling a lack of major acquisitions but strong capital preservation.
• Higher Treasury yields boosted returns on its short-term investments.

4. Net Earnings Declined Due to Investment Gains Slowdown

• Despite strong operating performance, net earnings attributable to shareholders fell 7.5% to $89 billion due to lower investment gains.
• However, 53% of Berkshire's 189 businesses reported lower earnings, making the investment income gains even more critical.

5. Railroad & Utility Divisions Showed Moderate Growth

• Railroad and utility earnings improved, but Berkshire acknowledged challenges in these areas.
• The company aims for further improvements in efficiency and profitability.

6. Record Corporate Tax Contribution

• Berkshire paid $26.8 billion in U.S. corporate income taxes, accounting for ~5% of total corporate tax payments in America.
• Buffett highlighted this figure, emphasizing Berkshire's economic impact.

What This Means for Investors

1. Berkshire's Cash Pile Signals Patience in Deploying Capital

• With over $334 billion in cash, Berkshire remains cautious about overpaying for acquisitions.
• Investors should watch for potential buybacks or large-scale investments in 2025.

2. Insurance Strength Offsets Weakness in Other Segments

• The rebound at GEICO and rising investment income are key drivers of future growth.
• Higher interest rates have significantly benefited Berkshire, making it well-positioned in this rate environment.

3. Greg Abel's Leadership Transition is in Focus

• With Buffett confirming that Greg Abel will take over as CEO, investors will scrutinize his leadership style and strategic vision.
• Continuity in investment philosophy will be key to maintaining Berkshire's success.

4. Tracking Key Metrics for Future Performance

• Investors should monitor:
  • Berkshire's cash deployment strategy (acquisitions, buybacks, or holding pattern).
  • Insurance underwriting margins, especially at GEICO.
  • Railroad and utility segment improvements.
  • Investment income trends, particularly Treasury yields' impact.

Final Thoughts: Berkshire's Strong Foundation for the Future

Despite weak earnings in some operating businesses, Berkshire Hathaway delivered record operating profits, proving its resilience and strategic strength.

With Greg Abel set to take the helm, record cash reserves, and strong insurance gains, the company remains one of the most stable long-term investments in the market.

For investors, the focus now shifts to how Berkshire deploys its capital in 2025 and whether its operating segments can sustain their momentum in a changing economic environment.