Berkshire Hathaway on Saturday reported a jump in earnings in the second quarter of 2023, recovering from large investment losses a year ago, when the bear market flummoxed even the most successful investors like Berkshire Chairman Warren Buffett.
Operating earnings totaled $10 billion in the second quarter, a 6.6% gain from the same period last year. Insurance underwriting and higher investment income helped boost Berkshire's operating profits.
The company posted net income of $35.9 billion after a loss of $43.6 billion in the second quarter of 2022. Berkshire posed $25.9 billion in investment gains last quarter, marking a significant turnaround from a year earlier, when its investments lost $53 billion in the second quarter alone.
Berkshire's insurance underwriting business crossed the billion-dollar threshold, with earnings of $1.25 billion, up from $715 million in the second quarter of 2022. Insurance investment income increased to $2.3 billion from $1.9 billion this time last year.
Berkshire-owned Geico, one of the largest insurance companies in the United States, is faring better than it did last year, posting an underwriting profit of $514 million in this year's second quarter. This is a modest decrease from $703 million in the first quarter but a sharp gain from last year's second-quarter loss of $487 million.
Comparatively, the insurance company has had a pretax underwriting profit of about $1.2 billion so far this year, helping to buoy Berkshire's earnings. Berkshire attributed these insurance earnings to higher average auto policy premiums, a decline in advertising costs, as well as reductions in claims estimates.
However, Berkshire's energy and freight railroad companies, BHE and BNSF, had a decrease in earnings compared to the same period last year.
Berkshire ended the quarter with a near record-high $147.4 billion in cash and cash equivalents, compared with $130.6 billion in the first quarter and $105.4 billion for the year-earlier period.
Berkshire's stock repurchases totaled $1.4 billion, compared with $4.4 billion in the first quarter.