Broken down, right here’s how the group carried out when it comes to internet earnings for the yr:
|
Source |
2022 |
2021 |
2020 |
|---|---|---|---|
|
Insurance – underwriting |
$(90 million) |
$728 million |
$657 million |
|
Insurance – funding earnings |
$6.48 billion |
$4.81 billion |
$5.04 billion |
|
Railroad |
$5.95 billion |
$5.99 billion |
$5.16 billion |
|
Utilities and vitality |
$3.9 billion |
$3.57 billion |
$3.14 billion |
|
Manufacturing, service, and retailing |
$12.51 billion |
$11.12 billion |
$8.3 billion |
|
Investment and by-product contract good points/(losses) |
$(53.61 billion) |
$62.34 billion |
$31.59 billion |
|
Other |
$2.04 billion |
$1.24 billion |
$(11.37 billion) |
|
Group |
$(22.82 billion) |
$89.8 billion |
$42.52 billion |
Lifting the lid on the underwriting numbers, Berkshire Hathaway mentioned: “Insurance underwriting generated an after-tax lack of $90 million in 2022 and after-tax earnings of $728 million in 2021 and $657 million in 2020. Insurance underwriting outcomes included after-tax losses from vital disaster occasions of roughly $2.4 billion in 2022, $2.3 billion in 2021, and $750 million in 2020.
“Underwriting results in 2022 were also negatively impacted by increases in private passenger automobile claims frequencies and severities at GEICO, and favorably impacted by higher earnings from reinsurance underwriting and foreign currency exchange rate gains arising from the remeasurement of non-US dollar-denominated liabilities of our US insurance subsidiaries.”
The agency highlighted that the timing and magnitude of disaster losses can produce vital volatility in Berkshire Hathaway’s periodic underwriting outcomes, significantly with respect to its reinsurance companies. Significant disaster occasions final yr included Hurricane Ian and floods in Australia.
Buffett’s message to buyers
Berkshire Hathaway chair Warren Buffett, in the meantime, requested buyers to deal with working earnings as a substitute.
Buffett said in his message inside the annual report: “Berkshire had a good year in 2022. The company’s operating earnings – our term for income calculated using Generally Accepted Accounting Principles (GAAP), exclusive of capital gains or losses from equity holdings – set a record at $30.8 billion. [Vice chair] Charlie [Munger] and I focus on this operational figure and urge you to do so as well.”
He continued: “The GAAP earnings are 100% misleading when viewed quarterly or even annually. Capital gains, to be sure, have been hugely important to Berkshire over past decades, and we expect them to be meaningfully positive in future decades. But their quarter-by-quarter gyrations, regularly and mindlessly headlined by media, totally misinform investors.”
The chair went on to spotlight the group’s buy of property & casualty insurer Alleghany Corporation.
“Alleghany delivers special value to us because Berkshire’s unmatched financial strength allows its insurance subsidiaries to follow valuable and enduring investment strategies unavailable to virtually all competitors,” mentioned Buffett.
“Aided by Alleghany, our insurance float increased during 2022 from $147 billion to $164 billion. With disciplined underwriting, these funds have a decent chance of being cost-free over time. Since purchasing our first property-casualty insurer in 1967, Berkshire’s float has increased 8,000-fold through acquisitions, operations, and innovations.”