Berkshire Hathaway earnings jumped 34% in the third quarter, powered by a sharp rebound in insurance underwriting, even as Warren Buffett kept dealmaking subdued and buybacks on pause. The cash pile swelled to a fresh record at $381.7 billion, underscoring the conglomerate’s flexibility—and Buffett’s restraint—in a higher-uncertainty market.
Key Points
Operating earnings reached $13.5 billion, according to company filings released Saturday. Insurance underwriting profit more than tripled during a quarter marked by unusually low disaster activity, offsetting weakness in some other lines. Net investment income slipped 13% to $3.2 billion amid lower short-term interest rates.
Key numbers at a glance:
- Cash and equivalents: $381.7 billion (record high)
- Operating earnings: $13.5 billion (+34% year over year)
- Net investment income: $3.2 billion (-13%)
- Share activity: $6.1 billion in stock sales during the quarter
- Buybacks: None for the fifth straight quarter
“There isn’t much opportunity in Buffett’s eyes right now,” said Jim Shanahan, analyst at Edward Jones, noting the quarter’s net selling and the growing cash cushion.
Why the cash keeps piling up
The record cash position speaks to two realities: Berkshire’s robust cash generation and a scarcity of large, attractively priced targets that meet Berkshire’s return thresholds. Earlier this year, Berkshire appeared to be back on the hunt, building a $1.6 billion stake in UnitedHealth Group and agreeing to acquire OxyChem for $9.7 billion last month. Yet in the third quarter, Berkshire Hathaway offloaded $6.1 billion of shares and refrained from deploying substantial capital elsewhere.
For investors tracking Berkshire Hathaway earnings, the expanding cash position is a double-edged signal. It offers dry powder for future deals and cushions against downturns, but it also implies that management is seeing limited opportunities that clear its hurdle rates at current valuations.
What the Berkshire Hathaway earnings reveal about core businesses
The quarter’s standout was insurance. Both primary insurance and reinsurance operations delivered pretax underwriting profits after losses a year ago. Lower catastrophe losses and disciplined pricing helped lift results.
- GEICO: Pretax underwriting profit declined 13% as claims ticked slightly higher and underwriting costs rose 40%. Management attributed the cost surge to “increased policy acquisition-related expenses,” a nod to heavy customer-growth spending. “Geico is everywhere right now,” Shanahan said, citing advertising intensity.
- Reinsurance: Improved catastrophe experience and prior-year reserve stability supported profitability, a notable swing from last year’s weather-heavy period.
Beyond insurance, the picture was mixed:
- BNSF Railway: Operating earnings rose 5% to $1.4 billion. Stronger demand for agricultural and energy shipments, including slightly higher grain exports, helped offset broader freight softness.
- Utilities and energy: Operating earnings declined 9% to $1.5 billion across PacifiCorp, MidAmerican and NV Energy. Regulatory dynamics, cost pressures and system investment needs continue to shape results.
- Pilot: The truck-stop chain posted a $17 million loss, pressured by lower wholesale fuel and retail margins along with higher expenses. Berkshire noted that Pilot is evaluating portfolio moves, and the chain has considered selling its water-management business to sharpen its core focus.
For readers parsing Berkshire Hathaway earnings, the segment mix reinforces the conglomerate’s durability. Insurance strength offset utility softness, while transportation improved modestly. That diversification is why Berkshire’s results are often treated as a high-level read on the US economy.
Deals, disposals and a growing cash cushion
Despite the earlier moves into UnitedHealth Group and OxyChem, Berkshire spent the third quarter on the sidelines. The company sold more equities than it bought and kept buybacks on hold for the fifth consecutive quarter, even as shares have fallen nearly 12% since May, when Buffett announced plans to step down at year-end.
Cathy Seifert of CFRA Research read the buyback pause as a clear signal. “If they’re not buying back their shares, why should you?” she said. Tepid revenue growth alongside the run-up in cash “is not going to help investor sentiment,” she added. “I’m struggling to find a catalyst” for the stock in the near term.
For long-term holders, buyback discipline is not new. Berkshire’s framework emphasizes repurchases only when price sits comfortably below intrinsic value and when other deployment options are unattractive. The current stance suggests management prefers to wait for fatter spreads between price and value—or for a large M&A opportunity that meets Berkshire’s quality and return criteria.
Analyst reactions to Berkshire Hathaway earnings
The reaction to Berkshire Hathaway earnings centered on three themes: underwriting quality, capital deployment and the impending CEO transition.
- Underwriting quality: Analysts welcomed the rebound in insurance profitability, driven by benign catastrophe experience and rate discipline. The GEICO expense spike raised eyebrows, but the consensus view is that elevated acquisition costs can be justified if policy growth and loss trends hold.
- Capital deployment: The record cash balance sharpened the debate over timing. Shanahan’s take—“There isn’t much opportunity”—echoed a view that valuations in public markets and private deals still feel full. Seifert’s skepticism on the lack of buybacks highlighted a near-term sentiment headwind.
- Transition watch: With Greg Abel set to become CEO at year-end, investors are watching for continuity in Berkshire’s decentralized model and its capital allocation philosophy. Abel has led Berkshire Hathaway Energy and played a growing role across the portfolio. The stable handoff is widely expected, yet the market will scrutinize early signals.
These reactions frame how Berkshire Hathaway earnings might translate into investor positioning over the next few quarters, particularly if economic growth slows or credit conditions tighten.
No buybacks, CEO transition and what to watch
Berkshire’s decision to refrain from repurchases for a fifth straight quarter surprised some investors given the share-price pullback. But it is consistent with Berkshire’s emphasis on opportunity cost and margin of safety. For followers of Berkshire Hathaway earnings, the bigger question is whether the cash hoard becomes a catalyst—or remains a buffer—heading into the leadership transition.
What to watch next:
- Insurance cycle: Rate adequacy, loss trends and catastrophe activity heading into year-end. Benign weather helped this quarter; that tailwind may normalize.
- GEICO expense discipline: Will acquisition spending translate into durable growth and improved combined ratios as claims stabilize?
- BNSF volumes: Demand for agricultural and energy products and any signs of a broader freight recovery.
- Utilities earnings path: Regulatory outcomes, capital needs for grid and generation, and potential asset-level adjustments.
- Pilot turnaround: Margin recovery in retail fuel and the outcome of any non-core divestitures.
- Capital allocation: Any step-up in M&A, shifts in equity exposure or a return to buybacks if valuation gaps widen.
Why this quarter matters for the broader economy
Because Berkshire touches insurance, freight, utilities and energy, Berkshire Hathaway earnings offer a window into real-economy dynamics. The insurance rebound suggests healthier pricing and fewer catastrophic hits in the period. BNSF’s uptick aligns with steadier agricultural flows and energy shipments. Utility softness highlights the investment and regulatory pressures facing power networks.
If growth cools, Berkshire’s balance sheet strength—underscored by the $381.7 billion cash reserve—positions it to play offense. Historically, Berkshire has been a buyer when liquidity dries up and spreads widen. That optionality is a key reason many investors treat Berkshire as a defensive core holding.
Leadership handoff: Continuity over change
With Buffett handing the CEO role to Greg Abel at year-end, investors are looking for continuity in underwriting discipline, capital allocation and culture. Berkshire’s decentralized structure and preference for durable, cash-generative businesses are unlikely to change. Berkshire Hathaway earnings in the coming quarters will be watched for any subtle shifts in deployment cadence, risk appetite or segment-level strategy under Abel.
The board’s long-telegraphed succession plan reduces transition risk. What will matter most is the opportunity set: if valuations break, Berkshire’s firepower could define Abel’s early tenure; if markets remain expensive, patience will likely prevail.
The bottom line
Berkshire Hathaway earnings delivered a clear message: the engine is humming, cash is piling up, and management is staying selective. Insurance underwriting did the heavy lifting, transportation improved, utilities softened, and Pilot disappointed. The absence of buybacks, coupled with net equity selling, points to caution rather than conviction at current prices.
For shareholders, the combination of record liquidity and disciplined deployment is a feature, not a bug. It preserves optionality heading into a leadership transition and a potentially more volatile macro backdrop. The next few quarters will test whether today’s cash becomes tomorrow’s catalyst—or remains a strategic buffer—inside one of America’s most closely watched conglomerates.
Daily Known will continue tracking Berkshire Hathaway earnings, capital moves and segment performance as the transition to Greg Abel takes effect.
FAQ’s
What were Berkshire Hathaway earnings this quarter?
Operating earnings were $13.5 billion, up 34% year over year. Insurance underwriting profit more than tripled, while net investment income fell 13% to $3.2 billion.
Why did Berkshire Hathaway’s cash pile reach a record $381.7 billion?
Strong cash generation, limited attractive deals at current valuations, $6.1 billion in stock sales and no buybacks for the fifth straight quarter kept cash rising.
Did Berkshire Hathaway repurchase shares in the quarter?
No. Berkshire did not buy back stock for the fifth consecutive quarter, consistent with its policy to repurchase only when shares trade below intrinsic value.
How did GEICO, BNSF, utilities and Pilot perform?
GEICO’s pretax underwriting profit fell 13% amid slightly higher claims and a 40% jump in underwriting costs tied to policy acquisition expenses. BNSF operating earnings rose 5% to $1.4 billion. Utilities’ operating earnings declined 9% to $1.5 billion. Pilot posted a $17 million loss due to weaker fuel margins and higher expenses.
Article Source: Bloomberg
