Berkshire Hathaway reported a record-breaking 71% increase in after-tax operating profits for the fourth quarter of 2024, reaching $14.5 billion. This surge was primarily fueled by robust performance in its large insurance division and increased investment income. The insurance underwriting profits soared by 302% to $3.409 billion, while investment income from insurance jumped nearly 50% to $4.088 billion.
Despite the impressive financial results, Berkshire did not engage in stock buybacks during the fourth quarter and repurchased only $2.9 billion worth of shares in 2024, marking the lowest annual buyback since 2018. This decision reflects the strong performance of Berkshire's stock, which rose over 25% last year, outperforming the S&P 500 index. The company has not repurchased shares since May 2024. CEO Warren Buffett (Trades, Portfolio) bases buyback decisions on the stock's price relative to his assessment of its intrinsic value.
By the end of last year, Berkshire's cash and equivalents reached a record $334 billion, up from $325 billion at the end of the third quarter. In his letter to shareholders, Buffett noted that Berkshire's performance in 2024 exceeded his expectations, despite 53% of its 189 operating businesses reporting lower earnings. The company's investment income saw significant growth due to increased Treasury yields, leading to a substantial increase in holdings of these highly liquid short-term securities. Additionally, the insurance business, led by GEICO, achieved significant profit growth.
Berkshire's operating profits for the entire year of 2024 rose 27% to $47.437 billion. However, fourth-quarter investment gains slowed significantly to $5.167 billion, compared to $29.093 billion in the same period the previous year, as Berkshire reduced stock investments and sold a substantial amount of Apple shares.
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