Berkshire Hathaway Posts Strong Q4 2024 Results
Berkshire Hathaway’s operating earnings for the fourth quarter of 2024 reached $14.5 billion, a substantial increase from the nearly $8.5 billion reported in Q4 2023. The insurance sector led the way, with significant gains across underwriting and investment income.
Insurance Drives Earnings Growth
Insurance underwriting experienced a substantial increase, reaching $3.4 billion in Q4 2024, up from $848 million in the same period of the previous year. Insurance investment income also saw a major boost, with nearly $4.1 billion recorded in Q4 compared to almost $2.76 billion in Q4 2023.
“In 2024, Berkshire did better than I expected, though 53% of our 189 operating businesses reported a decline in earnings,” Warren Buffett, Berkshire Hathaway’s chairman and CEO, stated in his yearly letter to shareholders. “We were aided by a predictable large gain in investment income as Treasury Bill yields improved and we substantially increased our holdings of these highly-liquid short-term securities. Our insurance business also delivered a major increase in earnings, led by the performance of GEICO.”
Buffett highlighted GEICO as a “long-held gem that needed major repolishing,” praising GEICO CEO Todd Combs’s efforts. He added, “In general, property-casualty (P/C) insurance pricing strengthened during 2024, reflecting a major increase in damage from convective storms. Climate change may have been announcing its arrival. However, no ‘monster’ event occurred during 2024. Someday, any day, a truly staggering insurance loss will occur – and there is no guarantee that there will be only one per annum.”
Insurance underwriting for the entire year totaled $9.02 billion, up from $5.4 billion in 2023. Insurance investment income reached nearly $13.7 billion in 2024, compared to over $9.5 billion in 2023.
P&C Insurance Remains a Core Business
Buffett emphasized that the property and casualty (P&C) insurance industry continues to be a central component of Berkshire Hathaway’s operations. “Over the past two decades, our insurance business has generated $32 billion of after-tax profits from underwriting, about 3.3 cents per dollar of sales after income tax,” Buffett wrote in the letter. “Meanwhile, our float has grown from $46 billion to $171 billion. The float is likely to grow a bit over time and, with intelligent underwriting (and some luck), has a reasonable prospect of being costless.”
According to data gathered in September by S&P Global, GEICO achieved an 11% year-over-year increase in premium changes as of Q2. The report noted, “Eight of the top 10 insurers in the analysis, including Progressive and State Farm, booked double-digit increases in direct premiums written.” The article added, “In addition to GEICO, Allstate and USAA, Auto Club Exchange Group had the third-largest increase with 18.7%, while American Family Insurance Group and The Travelers Cos. Inc. had increases of 12.5% and 10.8%, respectively.”
Insurance costs reached record highs last year. J.D. Power reported that the average annual premium increased to $2,543, a 26% rise from 2023. ValuePenguin predicts that the average driver will pay about 7.5% more for auto insurance this year as the new year began with a national average monthly premium of $175 for full coverage.
