Warren Buffett at the Berkshire Hathaway Annual Meeting in Los Angeles, California. May 1, 2021.
Gerhard Miller | CNBC
Warren Buffett’s Berkshire Hathaway’s earnings soared in the first quarter, thanks in part to a recovery in the conglomerate’s insurance business.
Operating income, which includes earnings from the conglomerate’s wholly-owned businesses, totaled $8.065 billion in the first quarter. That’s a 12.6% increase from $7.16 billion last year.
Insurance income was $911 million, a sharp increase from $167 million a year ago. Insurance investment income also increased 68% to $1.969 billion from $1.170 billion.
Geico took a big turnaround in the quarter, returning to a big underwriting profit of $703 million. The auto insurer suffered a $1.9 billion pretax underwriting loss last year as it lost market share to rival Progressive. Ajit Jain, Berkshire’s vice chairman of insurance operations, previously said the biggest culprit for Geico’s underperformance is telematics.
The company’s railroad business, BNSF, and its energy company posted year-over-year earnings declines. Operations classified under ‘Other controlled companies’ and ‘Non-controlled companies’ recorded modest increases compared to the same period last year.
Berkshire’s cash balance increased to $130.616 billion from $128 billion in the fourth quarter of 2022. Berkshire also repurchased $4.4 billion in shares — the most since the first quarter of 2021 — up from $2.8 billion late last year.
Berkshire’s net income, which includes short-term investment gains, rose to $35.5 billion in the quarter from $5.6 billion in the year-ago period, reflecting a comeback of Warren Buffett’s stock investments like Apple in the first quarter. Although Buffett warns investors not to pay attention to quarterly fluctuations in unrealized gains on investments.
The company’s latest quarterly results are released ahead of the conglomerate’s annual shareholder meeting, an event known as “Woodstock for capitalists.”
Berkshire Class A shares are up 4.9% for the year through Friday’s close, lagging the S&P 500’s 7.7% gain. However, the stock is less than 3% below an all-time high.
— CNBC’s Yun Li contributed to the coverage.
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