BERKSHIRE HATHAWAY INC Quarterly Report for Q3 Ended Sep 30, 2019

Summary

Berkshire Hathaway Inc. (BRK-B) reported solid financial results for the nine months ended September 30, 2019, with net earnings attributable to shareholders increasing significantly to $52.3 billion, up from $29.4 billion in the prior year period. This substantial growth was largely driven by a significant increase in investment and derivative gains, which more than tripled year-over-year, reflecting strong performance in equity markets and the favorable impact of the new accounting standard for recognizing unrealized gains on equity securities. Operating earnings across most segments also demonstrated resilience, with notable growth in the railroad, utilities and energy, and manufacturing segments. Despite a slight decline in underwriting earnings for the insurance segment due to increased losses and loss adjustment expenses, the overall financial health of Berkshire Hathaway remains robust. The company maintained a strong liquidity position, with $75.3 billion in cash and cash equivalents and U.S. Treasury Bills at the end of the third quarter. Shareholder equity also saw a substantial increase, reflecting the strong earnings performance and continued share repurchases, which totaled $2.8 billion in the first nine months of the year. Management highlighted the company's commitment to financial strength and maintaining ample liquidity.

Key Highlights

• 1Net earnings attributable to Berkshire Hathaway shareholders increased to $52.3 billion for the first nine months of 2019, a significant rise from $29.4 billion in the same period of 2018, largely due to investment gains.
• 2Investment and derivative gains more than tripled, reaching $41.3 billion for the first nine months of 2019, driven by unrealized gains on equity securities due to favorable market conditions and the adoption of new accounting standards.
• 3Insurance underwriting earnings saw a slight decrease to $1.18 billion for the first nine months of 2019 from $1.79 billion in 2018, primarily due to higher losses and loss adjustment expenses.
• 4Cash, cash equivalents, and U.S. Treasury Bills stood at $75.3 billion as of September 30, 2019, indicating strong liquidity.
• 5Shareholder equity increased to $401.6 billion at the end of the third quarter of 2019, up from $352.5 billion at the end of 2018.
• 6Berkshire repurchased $2.8 billion of its Class A and B common stock in the first nine months of 2019, demonstrating continued commitment to returning value to shareholders.
• 7The company made a significant investment of $10 billion in Occidental Petroleum Corporation's preferred stock and warrants in August 2019.

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