Berkshire Hathaway's Operating Earnings Soar Over 40% In Q3 — Did Buffett's Empire Defy Economic Headwinds This Season?

Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) on Saturday registered a solid increase in third-quarter operating earnings, driven by strength in insurance businesses, both in underwriting and investment income. 

The Omaha-based company's quarterly operating earnings of $10.76 billion rose from $7.65 billion in the year-ago quarter.

In the quarter under review, insurance underwriting generated earnings of $2.4 billion in Q3 versus losses of $1.1 billion year over year. Earnings from insurance investment income increased $1.1 billion in the third quarter primarily due to the impact of higher short-term interest rates, partly offset by lower dividend income.

Approximately $1.1 billion was used to repurchase Berkshire shares during Q3, bringing the nine-month total to roughly $7 billion.

The company's cash accumulation scaled a new record at $157.2 billion, supported by elevated interest rates and a shortage of "meaningful deals" where billionaire investor Warren Buffett could put his money to work, according to a news report from Bloomberg.

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Insurance and Railroad Operations

The company has a diverse portfolio of investments, with ownership stakes in enterprises such as Geico, BNSF, Dairy Queen and See's Candies. This extensive involvement across various sectors has led investors to consider the company as an indicator of the country's overall economic condition.

GEICO's underwriting premiums written increased $283 million (2.8%) in the third quarter, while Burlington Northern Santa's operating revenues declined 12.4% in the third quarter.

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Despite Warren Buffett's warning at the May annual meeting in Omaha that most of its subsidiaries might see a decline in earnings this year as an "incredible period" for the U.S. economy comes to a close, Berkshire reported an increase in operating profits, according to the Bloomberg note.

The rapid rate increases by the Federal Reserve have enabled the company to earn higher returns on the substantial cash reserves it primarily holds in short-term US Treasuries, the report added.

Net Losses Amidst Operational Gains

However, the company reported a first-quarter net loss of $8,824 per average equivalent Class A share, wider than the net loss of $1,907 per share in the year-ago period. This is because net earnings attributable to Berkshire shareholders included after-tax losses of $23.5 billion.

The company registered a net loss of $5.88 per average equivalent Class B share, wider than the net loss of $1.27 per share year over year.

Berkshire's Q3 net loss was $12.77 billion compared with a $2.8 billion loss a year earlier.

At the end of the quarter, the company said 78% of its aggregate fair value in equity investments was concentrated in five companies:

American Express Company AXP: $22.6 billion

• Apple Inc. AAPL: $156.8 billion
• Bank Of America Corporation BAC: $28.3 billion
• Coca-Cola Company KO: $22.4 billion
• Chevron Corporation CVX: $18.6 billion

Buffet, 93, is one of the best-known fundamental investors in the world. Known as the "Oracle of Omaha," he has a real-time net worth is $117.5 billion, per Forbes. 

Price Action: BRK/B shares closed lower by 0.03% to $351.70 on Friday; shares were up by 0.8% to $351.81 after hours. BRK/A shares closed higher by 0.66% to $533,815.00 on Friday. 

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