Berkshire Hathaway earnings rose sharply in the third quarter as Warren Buffett’s conglomerate amassed a record $381.7 billion in cash and equivalents, reflecting strong insurance results during a quiet catastrophe season and disciplined capital deployment.
Key Points
Filings released Saturday show operating earnings of $13.5 billion, up 34% year over year. The company’s insurance operations were the standout, offsetting a drop in net investment income tied to lower short‑term interest rates and a softer result at Geico.
Berkshire Hathaway earnings: key numbers and takeaways
- Cash and equivalents: $381.7 billion (record high)
- Operating earnings: $13.5 billion (+34%)
- Net investment income: $3.2 billion (−13%), reflecting lower short‑term rates
- Equity portfolio activity: $6.1 billion of stock sales
- Underwriting: primary insurance and reinsurance both posted pretax profits, reversing year‑ago losses
- Geico: pretax underwriting profit fell 13% on higher claims, while the unit continued to add customers
- Buybacks: none for the fifth straight quarter, even after the share price fell nearly 12% since May when Buffett said he would step down as CEO at year‑end
Together, these figures frame Berkshire Hathaway earnings as a product of underwriting strength, cautious investing and sustained liquidity.
Insurance momentum under calmer catastrophe conditions
Berkshire’s quarter benefited from unusually low disaster activity. That backdrop helped both primary insurance and reinsurance swing to pretax underwriting profits from losses a year earlier. Management emphasized that disciplined pricing and risk selection supported results in core lines.
- Lower catastrophe losses eased severity pressure across the portfolio
- Rate adequacy and underwriting discipline remained focal points
- Reinsurance benefited from firm market conditions and careful exposure management
The performance underscores how underwriting quality can drive Berkshire Hathaway earnings even when investment income softens.
Geico: growth with higher claims severity
Geico delivered a year‑on‑year decline in pretax underwriting profit, down 13%, as claims severity increased. At the same time, the auto insurer continued to add policyholders, signaling ongoing franchise strength.
Key dynamics noted in the filing:
- Higher claims costs pressured margins
- Customer additions continued, supporting premium growth
- Rate and underwriting actions remained in focus to balance volume and profitability
Geico’s trend tempered the group result but did not offset the broader insurance profitability that supported Berkshire Hathaway earnings in the quarter.
Capital deployment, portfolio activity and the rising cash balance
Despite selling $6.1 billion of equities, Berkshire’s cash hoard climbed to a fresh record. With short‑term rates lower, net investment income fell 13% to $3.2 billion, a reminder that the company’s sizable liquidity is sensitive to money‑market yields.
- Equity activity: net sellers of stock during the period
- Cash strategy: maintaining substantial liquidity while awaiting attractive opportunities
- Rate backdrop: lower yields translated into weaker interest income
Berkshire Hathaway earnings thus reflected a blend of operating strength and conservative capital allocation, with the cash pile positioning the firm for flexibility across cycles.
No buybacks for a fifth straight quarter
The company did not repurchase shares for the fifth quarter in a row. That restraint continued even after the stock declined nearly 12% following the May announcement that Buffett plans to step down as CEO at the end of the year. Management has historically been selective on repurchases, weighing intrinsic value and alternative uses of capital.
For shareholders, the lack of buybacks concentrates attention on underwriting performance, investment opportunities and potential future deployments of the record cash balance that could influence Berkshire Hathaway earnings ahead.
Why this quarter matters beyond Berkshire
Berkshire Hathaway earnings are closely watched because the conglomerate spans insurance, rail, energy and manufacturing—sectors that collectively offer a read on US economic conditions.
Signals from this quarter:
- Insurance demand and pricing remained firm amid a calmer catastrophe environment
- Consumer‑linked auto insurance saw higher claims severity even as policy counts grew
- Industrial and utility holdings within the group provide indirect insight into freight, power and manufacturing activity, areas investors monitor for direction on growth
These cross‑currents give markets a high‑level snapshot of the backdrop facing large US businesses.
What investors are watching next
- Catastrophe activity: how loss trends evolve into year‑end and their impact on underwriting margins
- Rate environment: implications of short‑term yields for the return on cash
- Equity portfolio moves: whether Berkshire becomes a net buyer if valuations change
- Geico profitability: the pace of margin repair amid claims trends and rate actions
- Capital deployment: potential uses of the record cash, including deals or future repurchases if conditions warrant
Each factor could shape the trajectory of Berkshire Hathaway earnings in coming quarters without departing from the company’s long‑standing emphasis on discipline and liquidity.
Bottom line
Berkshire Hathaway earnings advanced 34% as insurance profitability strengthened and catastrophe costs stayed subdued. The record $381.7 billion cash balance, a pullback in buybacks and measured stock sales highlight a conservative stance that preserves flexibility. While Geico’s margin pressure and lower interest income moderated the overall picture, the quarter reinforced the conglomerate’s capacity to generate earnings power in varied market conditions.
Daily Known will continue tracking filings and management updates for developments that could influence Berkshire’s operating run‑rate, capital allocation and the outlook for its diversified businesses.
FAQ’s
What were the headline Berkshire Hathaway earnings this quarter?
Operating earnings rose 34% to $13.5B; cash hit a record $381.7B; net investment income fell 13% to $3.2B; and Berkshire sold $6.1B of equities.
Why did cash rise while net investment income fell?
Strong underwriting and limited disasters boosted cash, but lower short‑term rates reduced interest income, pulling net investment income down 13%.
Did Berkshire repurchase shares this quarter?
No. Berkshire did not buy back stock for the fifth straight quarter, despite the share price falling nearly 12% since May.
How did Geico perform?
Geico’s pretax underwriting profit fell 13% on higher claims, though it continued adding customers. Insurance underwriting elsewhere remained profitable.
Article Source: Bloomberg
Image Source: The Wall Street Journal
