BERKSHIRE HATHAWAY INC Quarterly Report for Q3 Ended Sep 30, 2022

Summary

Berkshire Hathaway Inc. reported a net loss of $2.69 billion for the third quarter of 2022, resulting in a year-to-date net loss of $40.98 billion. This significant loss is primarily driven by investment and derivative contract losses, which amounted to $13.47 billion for the quarter and $82.36 billion for the first nine months of the year, largely due to unrealized losses on equity securities. Despite the net loss, the company's insurance underwriting operations showed improvement, with a pre-tax underwriting loss of $1.15 billion for the quarter, a reduction from the prior year's loss of $1.02 billion. The company also completed the acquisition of Alleghany Corporation for approximately $11.6 billion in October 2022. Berkshire Hathaway maintained substantial liquidity, with cash, cash equivalents, and U.S. Treasury Bills totaling $105.2 billion at the end of the quarter, underscoring its financial strength despite market volatility. Revenues across most segments showed growth compared to the prior year. BNSF reported a 16.8% increase in operating revenues for the quarter driven by higher average revenue per car/unit, while Utilities and Energy saw a 7.1% increase in total revenue driven by energy operating revenues. Manufacturing, Service, and Retailing also experienced revenue growth. However, GEICO's underwriting results deteriorated, with a pre-tax underwriting loss of $759 million for the quarter, impacted by increased claims severity and frequency due to inflation. Management emphasized that investment gains and losses, both realized and unrealized, are considered non-operating and can cause significant volatility in reported earnings, and should not be used to evaluate the economic performance of the businesses.

Key Highlights

• 1Net loss attributable to Berkshire Hathaway shareholders of $2.69 billion in Q3 2022 and $40.98 billion for the first nine months of 2022, significantly impacted by investment and derivative contract losses ($13.47 billion in Q3, $82.36 billion YTD).
• 2Insurance underwriting operations showed a pre-tax underwriting loss of $1.15 billion in Q3 2022, a slight improvement from $1.02 billion in Q3 2021, though GEICO experienced increased underwriting losses.
• 3Total revenues for the nine months ended September 30, 2022, increased to $223.92 billion from $204.30 billion in the same period of 2021.
• 4Acquisition of Alleghany Corporation completed on October 19, 2022, for approximately $11.6 billion, funded by existing cash balances.
• 5Cash, cash equivalents, and U.S. Treasury Bills remained robust at $105.2 billion as of September 30, 2022, providing significant liquidity.
• 6BNSF's railroad operating revenues increased 16.8% in Q3 2022, driven by higher average revenue per car/unit, despite a 5.0% decrease in freight volumes.
• 7Berkshire Hathaway Energy (BHE) reported an increase in net earnings attributable to Berkshire Hathaway shareholders of 4.4% for the first nine months of 2022 compared to the prior year.

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