Berkshire Hathaway’s earning up $6 billion in Q4, led by insurance underwriting and investment

Berkshire Hathaway’s operating earnings for Q4 2024 were $14.5 billion, up from nearly $8.5 billion the company made during Q4 2023. 

Insurance underwriting saw the largest increase, with $3.4 billion reported in Q4 in comparison to $848 million reported during the same time in 2023. Insurance investment income also saw a massive increase in earnings, with nearly $4.1 billion recorded in Q4 compared to nearly $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, company chairman and CEO, said in his annual 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 called GEICO a “long-held gem that needed major repolishing.” He praised Todd Combs, GEICO CEO, for getting the job done. 

“In general, property-casualty (P/C) insurance pricing strengthened during 2024, reflecting a major increase in damage from convective storms,” Buffett said in the letter. “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 full year was $9.02 billion and $5.4 billion in 2023. Insurance investment income was nearly $13.7 billion in 2024 and over $9.5 billion in 2023. 

Buffett said the P&C insurance industry continues to be Berkshire’s core business. 

“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 compiled by S&P Global in September, as of Q2, GEICO had an 11% increase year-over-year premium change. 

“Eight of the top 10 insurers in the analysis, including Progressive and State Farm, booked double-digit increases in direct premiums written,” the article says. “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.” 

Last year, insurance costs hit record levels. The average annual premium was $2,543, up 26% from 2023, according to J.D. Power. 

ValuePenguin predicts drivers will pay an average of 7.5% more this year for auto insurance as the new year kicked off with an average nationwide monthly premium of $175 for full coverage.

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Photo courtesy of jetcityimage/iStock

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