Buffett’s Berkshire Posts Record Cash as Operating Earnings Rise | International Business News

Warren Buffett’s Berkshire Hathaway Inc. posted an increase in operating earnings as higher interest rates and fewer catastrophes benefited the conglomerate’s insurance business.
The firm reported fourth-quarter operating earnings of $8.48 billion, versus $6.63 billion for same period a year earlier. The results were helped by a jump in insurance underwriting earnings and investment income amid higher interest rates and milder weather. The firm’s cash pile also set a fresh record at $167.6 billion, as the billionaire investor continued to confront a scarcity of larger deals.
Berkshire’s earnings are always closely watched as a proxy for US economic health because of the expansive nature of his businesses — ranging from railroad BNSF, Geico and Dairy Queen. That also makes the company particularly susceptible to higher interest rates, which can crimp demand, and Buffett warned in May last year that earnings at most of its operations would fall in 2023 as an “incredible period” for the US economy draws to an end.
“Our insurance business performed exceptionally well last year, setting records in sales, float and underwriting profits,” Buffett said in his annual shareholder letter, which the company released alongside its earnings on Saturday. “We have much room to grow.”
This is the first time Berkshire reported earnings since Charlie Munger, Berkshire’s vice chairman and Buffett’s long-time investing partner died, aged 99, in late November. Buffett devoted much of the letter to praising Munger’s role in creating the sprawling firm.
Despite ramping up Berkshire’s acquisition machine in recent years, the company has still struggled to find many of the big-ticket deals that galvanized Buffett’s reputation, leaving him with more cash than he and his investing deputies could quickly deploy.
After hanging back during the pandemic, he’s since snapped up shares in Occidental Petroleum Corp. and struck an $11.6 billion deal to buy Alleghany Corp. The investor also boosted Berkshire’s stake in five of Japan’s trading houses last year after their profits surged — a move that fueled a rally in their stock. Buffett has also continued to lean on share repurchases amid the dearth of appealing alternatives, saying the measures benefit shareholders.
Including investment and derivatives, Berkshire posted $37.6 billion of net earnings for the quarter, wider than the year prior, helped by higher interest rates. Berkshire often recommends that investors look past investment gains or losses, which are tied to accounting rules, saying they can be misleading.
In the absence of bigger deals, Buffett has also continued to lean on share repurchases, which he has said benefit shareholders. The firm spent $2.2 billion on buybacks in the fourth quarter, bringing the total for the year to about $9.2 billion.