Item 1. Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED BA****LANCE SHEETS

(dollars in millions)

	September 30, 2022				December 31, 2021
	(Unaudited)
ASSETS
Insurance and Other:
Cash and cash equivalents*	$	28,869			$	85,319
Short-term investments in U.S. Treasury Bills		76,332				58,535
Investments in fixed maturity securities		18,602				16,434
Investments in equity securities		306,167				350,719
Equity method investments		28,714				17,375
Loans and finance receivables		22,094				20,751
Other receivables		40,383				35,388
Inventories		25,102				20,954
Property, plant and equipment		20,378				20,834
Equipment held for lease		15,139				14,918
Goodwill		46,822				47,117
Other intangible assets		27,738				28,486
Deferred charges - retroactive reinsurance		9,990				10,639
Other		16,753				15,854
		683,083				743,323
Railroad, Utilities and Energy:
Cash and cash equivalents*		3,757				2,865
Receivables		4,985				4,177
Property, plant and equipment		157,472				155,530
Goodwill		26,513				26,758
Regulatory assets		4,750				3,963
Other		21,736				22,168
		219,213				215,461
	$	902,296			$	958,784

*** *Includes U.S. Treasury Bills with maturities of three months or less when purchased of $*1.9 *billion at September 30, 2022 and $*61.7 billion at December 31, 2021.

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CON****SOLIDATED BALANCE SHEETS

(dollars in millions)

	September 30, 2022				December 31, 2021
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance and Other:
Unpaid losses and loss adjustment expenses	$	91,642			$	86,664
Unpaid losses and loss adjustment expenses under retroactive reinsurance contracts		36,666				38,256
Unearned premiums		26,878				23,512
Life, annuity and health insurance benefits		22,305				22,452
Other policyholder liabilities		9,051				9,330
Accounts payable, accruals and other liabilities		31,100				30,376
Aircraft repurchase liabilities and unearned lease revenues		6,165				5,849
Notes payable and other borrowings		41,535				39,272
		265,342				255,711
Railroad, Utilities and Energy:
Accounts payable, accruals and other liabilities		16,871				15,696
Regulatory liabilities		7,220				7,214
Notes payable and other borrowings		74,961				74,990
		99,052				97,900
Income taxes, principally deferred		74,155				90,243
Total liabilities		438,549				443,854
Shareholders’ equity:
Common stock		8				8
Capital in excess of par value		35,190				35,592
Accumulated other comprehensive income		(8,234	)			(4,027	)
Retained earnings		493,438				534,421
Treasury stock, at cost		(64,972	)			(59,795	)
Berkshire Hathaway shareholders’ equity		455,430				506,199
Noncontrolling interests		8,317				8,731
Total shareholders’ equity		463,747				514,930
	$	902,296			$	958,784

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEM****ENTS OF EARNINGS

(dollars in millions except per share amounts)

(Unaudited)

	Third Quarter						First Nine Months
	2022			2021			2022			2021
Revenues:
Insurance and Other:
Insurance premiums earned	$	18,810		$	17,727		$	54,389		$	51,314
Sales and service revenues		39,597			36,722			117,679			107,163
Leasing revenues		1,959			1,565			5,518			4,336
Interest, dividend and other investment income		2,378			1,795			7,101			5,544
		62,744			57,809			184,687			168,357
Railroad, Utilities and Energy:
Freight rail transportation revenues		6,663			5,761			19,219			16,917
Energy operating revenues		6,090			5,225			15,843			14,375
Service revenues and other income		1,437			1,788			4,175			4,647
		14,190			12,774			39,237			35,939
Total revenues		76,934			70,583			223,924			204,296
Investment and derivative contract gains (losses)		(13,465	)		4,921			(82,362	)		38,015
Costs and expenses:
Insurance and Other:
Insurance losses and loss adjustment expenses		16,005			13,939			42,957			37,078
Life, annuity and health insurance benefits		1,450			1,568			4,055			4,507
Insurance underwriting expenses		2,506			3,239			7,734			9,318
Cost of sales and services		31,292			28,984			92,710			84,275
Cost of leasing		1,418			1,116			4,148			2,980
Selling, general and administrative expenses		4,068			4,889			12,081			13,844
Interest expense		297			286			863			860
		57,036			54,021			164,548			152,862
Railroad, Utilities and Energy:
Freight rail transportation expenses		4,581			3,527			12,766			10,625
Utilities and energy cost of sales and other expenses		4,295			3,497			11,730			10,306
Other expenses		1,320			1,582			4,003			4,238
Interest expense		795			770			2,350			2,322
		10,991			9,376			30,849			27,491
Total costs and expenses		68,027			63,397			195,397			180,353
Earnings (loss) before income taxes and equity method earnings		(4,558	)		12,107			(53,835	)		61,958
Equity method earnings		441			377			1,048			775
Earnings (loss) before income taxes		(4,117	)		12,484			(52,787	)		62,733
Income tax expense (benefit)		(1,529	)		1,840			(12,408	)		11,824
Net earnings (loss)		(2,588	)		10,644			(40,379	)		50,909
Earnings attributable to noncontrolling interests		100			300			604			760
Net earnings (loss) attributable to Berkshire Hathaway shareholders	$	(2,688	)	$	10,344		$	(40,983	)	$	50,149
Net earnings (loss) per average equivalent Class A share	$	(1,832	)	$	6,882		$	(27,866	)	$	33,025
Net earnings (loss) per average equivalent Class B share*	$	(1.22	)	$	4.59		$	(18.58	)	$	22.02
Average equivalent Class A shares outstanding		1,466,946			1,503,013			1,470,714			1,518,513
Average equivalent Class B shares outstanding		2,200,419,462			2,254,518,838			2,206,070,294			2,277,769,582

*** Class B shares are economically equivalent to one-fifteen-hundredth of a Class A share. Accordingly, net earnings (loss) per average equivalent Class B share outstanding is equal to one-fifteen-hundredth of the equivalent Class A amount. See Note 17.

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEMENTS O****F COMPREHENSIVE INCOME

(dollars in millions)

(Unaudited)

		Third Quarter								First Nine Months
		2022				2021				2022				2021
Net earnings (loss)		$	(2,588	)		$	10,644			$	(40,379	)		$	50,909
Other comprehensive income:
Unrealized appreciation of investments			(527	)			(89	)			(974	)			(164	)
Applicable income taxes			113				20				208				38
Foreign currency translation			(1,727	)			(643	)			(3,794	)			(616	)
Applicable income taxes			(38	)			6				14				(8	)
Defined benefit pension plans			29				54				70				158
Applicable income taxes			(7	)			(13	)			(16	)			(42	)
Other, net			44				38				199				45
Other comprehensive income, net			(2,113	)			(627	)			(4,293	)			(589	)
Comprehensive income			(4,701	)			10,017				(44,672	)			50,320
Comprehensive income attributable to noncontrolling interests			46				288				518				762
Comprehensive income attributable to Berkshire Hathaway shareholders		$	(4,747	)		$	9,729			$	(45,190	)		$	49,558

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(dollars in millions)

(Unaudited)

		Berkshire Hathaway shareholders’ equity
		Common stock and capital in excess of par value				Accumulated other comprehensive income				Retained earnings				Treasury stock				Non- controlling interests				Total
For the third quarter and first nine months of 2022
Balance at December 31, 2021		$	35,600			$	(4,027	)		$	534,421			$	(59,795	)		$	8,731			$	514,930
Net earnings			—				—				5,460				—				125				5,585
Other comprehensive income, net			—				(401	)			—				—				(3	)			(404	)
Acquisition of common stock			—				—				—				(3,111	)			—				(3,111	)
Transactions with noncontrolling interests			(6	)			—				—				—				(129	)			(135	)
Balance at March 31, 2022		$	35,594			$	(4,428	)		$	539,881			$	(62,906	)		$	8,724			$	516,865
Net earnings (loss)			—				—				(43,755	)			—				379				(43,376	)
Other comprehensive income, net			—				(1,747	)			—				—				(29	)			(1,776	)
Acquisition of common stock			—				—				—				(1,028	)			—				(1,028	)
Transactions with noncontrolling interests			(382	)			—				—				—				(650	)			(1,032	)
Balance at June 30, 2022		$	35,212			$	(6,175	)		$	496,126			$	(63,934	)		$	8,424			$	469,653
Net earnings (loss)			—				—				(2,688	)			—				100				(2,588	)
Other comprehensive income, net			—				(2,059	)			—				—				(54	)			(2,113	)
Acquisition of common stock			—				—				—				(1,038	)			(153	)			(1,191	)
Transactions with noncontrolling interests			(14	)			—				—				—								(14	)
Balance at September 30, 2022		$	35,198			$	(8,234	)		$	493,438			$	(64,972	)		$	8,317			$	463,747
For the third quarter and first nine months of 2021
Balance at December 31, 2020		$	35,634			$	(4,243	)		$	444,626			$	(32,853	)		$	8,172			$	451,336
Net earnings			—				—				11,711				—				129				11,840
Other comprehensive income, net			—				(327	)			—				—				7				(320	)
Acquisition of common stock			—				—				—				(6,565	)			—				(6,565	)
Transactions with noncontrolling interests			4				—				—				—				(119	)			(115	)
Balance at March 31, 2021		$	35,638			$	(4,570	)		$	456,337			$	(39,418	)		$	8,189			$	456,176
Net earnings			—				—				28,094				—				331				28,425
Other comprehensive income, net			—				351				—				—				7				358
Acquisition of common stock			—				—				—				(6,028	)			—				(6,028	)
Transactions with noncontrolling interests			5				—				—				—				(136	)			(131	)
Balance at June 30, 2021		$	35,643			$	(4,219	)		$	484,431			$	(45,446	)		$	8,391			$	478,800
Net earnings			—				—				10,344				—				300				10,644
Other comprehensive income, net			—				(615	)			—				—				(12	)			(627	)
Acquisition of common stock			—				—				—				(7,626	)			—				(7,626	)
Transactions with noncontrolling interests			(32	)			—				—				—				(84	)			(116	)
Balance at September 30, 2021		$	35,611			$	(4,834	)		$	494,775			$	(53,072	)		$	8,595			$	481,075

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEM****ENTS OF CASH FLOWS

(dollars in millions)

(Unaudited)

		First Nine Months
		2022				2021
Cash flows from operating activities:
Net earnings (loss)		$	(40,379	)		$	50,909
Adjustments to reconcile net earnings (loss) to operating cash flows:
Investment (gains) losses			82,089				(37,235	)
Depreciation and amortization			8,141				8,013
Other			(4,935	)			(717	)
Changes in operating assets and liabilities:
Unpaid losses and loss adjustment expenses			4,551				4,809
Deferred charges - retroactive reinsurance			649				709
Unearned premiums			3,632				3,958
Receivables and originated loans			(7,527	)			(6,810	)
Other assets			(5,599	)			(1,558	)
Other liabilities			2,515				1,928
Income taxes			(16,114	)			7,620
Net cash flows from operating activities			27,023				31,626
Cash flows from investing activities:
Purchases of equity securities			(66,246	)			(5,004	)
Sales of equity securities			17,343				11,975
Purchases of U.S. Treasury Bills and fixed maturity securities			(139,359	)			(106,399	)
Sales of U.S. Treasury Bills and fixed maturity securities			69,998				15,945
Redemptions and maturities of U.S. Treasury Bills and fixed maturity securities			47,512				103,294
Purchases of loans and finance receivables			(31	)			(70	)
Collections of loans and finance receivables			332				283
Acquisitions of businesses, net of cash acquired			(183	)			(204	)
Purchases of property, plant and equipment and equipment held for lease			(10,907	)			(9,244	)
Other			32				1,505
Net cash flows from investing activities			(81,509	)			12,081
Cash flows from financing activities:
Proceeds from borrowings of insurance and other businesses			6,981				2,952
Repayments of borrowings of insurance and other businesses			(1,468	)			(3,010	)
Proceeds from borrowings of railroad, utilities and energy businesses			3,185				2,939
Repayments of borrowings of railroad, utilities and energy businesses			(1,791	)			(2,609	)
Changes in short term borrowings, net			(531	)			(689	)
Acquisition of treasury stock			(5,246	)			(20,192	)
Other			(1,441	)			(755	)
Net cash flows from financing activities			(311	)			(21,364	)
Effects of foreign currency exchange rate changes			(553	)			(98	)
Increase (decrease) in cash and cash equivalents and restricted cash			(55,350	)			22,245
Cash and cash equivalents and restricted cash at beginning of year*			88,706				48,396
Cash and cash equivalents and restricted cash at end of third quarter*		$	33,356			$	70,641
*Cash and cash equivalents and restricted cash are comprised of:
Beginning of year—
Insurance and Other		$	85,319			$	44,714
Railroad, Utilities and Energy			2,865				3,276
Restricted cash included in other assets			522				406
		$	88,706			$	48,396
End of third quarter—
Insurance and Other		$	28,869			$	65,156
Railroad, Utilities and Energy			3,757				4,833
Restricted cash included in other assets			730				652
		$	33,356			$	70,641

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

Note 1. General

The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc. (“Berkshire” or “Company”) consolidated with the accounts of all its subsidiaries and affiliates in which Berkshire holds controlling financial interests as of the financial statement date. In these notes, the terms “us,” “we” or “our” refer to Berkshire and its consolidated subsidiaries. Reference is made to Berkshire’s most recently issued Annual Report on Form 10-K (“Annual Report”), which includes information necessary or useful to understanding Berkshire’s businesses and financial statement presentations. Our significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in the Annual Report.

Financial information in this Quarterly Report reflects all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with accounting principles generally accepted in the United States (“GAAP”). For a number of reasons, our results for interim periods are not normally indicative of results to be expected for the year. The timing and magnitude of catastrophe losses incurred by insurance subsidiaries and the estimation error inherent to the process of determining liabilities for unpaid losses of insurance subsidiaries can be more significant to results of interim periods than to results for a full year. Given the size of our equity security investment portfolio, changes in market prices and the related changes in unrealized gains and losses on equity securities will produce significant volatility in our interim and annual earnings. In addition, the magnitude of gains and losses from the periodic revaluation of certain assets and liabilities denominated in foreign currencies and asset impairment charges may cause significant variations in periodic net earnings.

To varying degrees, the COVID-19 pandemic continues to affect our operating businesses. Significant government and private sector actions have been taken since 2020 to control the spread and mitigate the economic effects of the virus and its variants. Such actions in 2022 included temporary business closures or restrictions of business activities in various parts of the world. In addition, significant disruptions of supply chains and higher costs emerged in 2021 and have persisted in 2022. The development of geopolitical conflicts in 2022 have contributed to disruptions of supply chains, resulting in cost increases for commodities, goods and services in many parts of the world. In the U.S. and elsewhere, governments are implementing actions intended to slow price inflation. The economic effects from these events over longer terms cannot be reasonably estimated at this time. Accordingly, significant estimates used in the preparation of our financial statements, including those associated with evaluations of certain long-lived assets, goodwill and other intangible assets for impairment, expected credit losses on amounts owed to us and the estimations of certain losses assumed under insurance and reinsurance contracts, may be subject to significant adjustments in future periods.

Note 2. New accounting pronouncements

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-12 “Targeted Improvements to the Accounting for Long-Duration Contracts” (“ASU 2018-12”). ASU 2018-12 requires reassessment of cash flow assumptions at least annually and revision of discount rate assumptions each reporting period in valuing policyholder liabilities of long-duration contracts. Under ASU 2018-12, the effects from changes in cash flow assumptions are reflected in earnings and the effects from changes in discount rate assumptions are reflected in other comprehensive income. Currently, the cash flow and discount rate assumptions are set at the contract inception date and not subsequently changed, except under limited circumstances. ASU 2018-12 is to be applied retrospectively to the earliest period presented in the financial statements, will require new disclosures and is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

We will adopt ASU 2018-12 as of January 1, 2023 using the modified retrospective method, whereby revised cash flow and discount rate assumptions as of January 1, 2021 (the transition date) are applied to contracts then in-force, with liabilities then remeasured, with the cumulative effect from discount rate changes (based on changes in prevailing interest rates) recorded in accumulated other comprehensive income and the cumulative effect from cash flow assumption changes in retained earnings. While we have not finalized our assessment and continue to evaluate the impact of the adoption beginning as of the transition date, we believe that the changes in discount rate assumptions will initially have a greater effect on our recorded liabilities than changes in cash flow assumptions. We preliminarily estimate the cumulative effect of adopting ASU 2018-12 will reduce our consolidated shareholders’ equity from the amount previously reported by approximately $6.5 billion as of January 1, 2021, with that reduction declining to approximately $4.7 billion as of December 31, 2021. While we have not determined the effect of adopting ASU 2018-12 as of September 30, 2022, we currently expect the cumulative reduction to our consolidated shareholders’ equity has declined significantly since December 31, 2021, based on the interest rate increases in 2022.

Notes to Consolidated Financial Statements (Continued)

Note 3. Investments in fixed maturity securities

Investments in fixed maturity securities as of September 30, 2022 and December 31, 2021 are summarized by type below (in millions).

		Amortized Cost				Unrealized Gains				Unrealized Losses				Fair Value
September 30, 2022
U.S. Treasury, U.S. government corporations and agencies		$	9,039			$	4			$	(268	)		$	8,775
Foreign governments			8,701				9				(205	)			8,505
Corporate bonds			830				205				(6	)			1,029
Other			275				22				(4	)			293
		$	18,845			$	240			$	(483	)		$	18,602
December 31, 2021
U.S. Treasury, U.S. government corporations and agencies		$	3,286			$	22			$	(5	)		$	3,303
Foreign governments			10,998				29				(33	)			10,994
Corporate bonds			1,363				412				(1	)			1,774
Other			317				47				(1	)			363
		$	15,964			$	510			$	(40	)		$	16,434

Investments in foreign governments include securities issued by national and provincial government entities as well as instruments that are unconditionally guaranteed by such entities. As of September 30, 2022, approximately 93% of our foreign government holdings were rated AA or higher by at least one of the major rating agencies. The amortized cost and estimated fair value of fixed maturity securities at September 30, 2022 are summarized below by contractual maturity dates. Amounts are in millions. Actual maturities may differ from contractual maturities due to prepayment rights held by issuers.

		Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years				Mortgage- backed securities				Total
Amortized cost		$	7,904			$	10,201			$	460			$	82			$	198			$	18,845
Fair value			7,753				9,895				654				85				215				18,602

Note 4. Investments in equity securities

Investments in equity securities as of September 30, 2022 and December 31, 2021 are summarized as follows (in millions).

		Cost Basis				Net Unrealized Gains				Fair Value
September 30, 2022*
Banks, insurance and finance		$	32,148			$	36,817			$	68,965
Consumer products			41,106				116,615				157,721
Commercial, industrial and other			69,056				10,425				79,481
		$	142,310			$	163,857			$	306,167

*** Approximately 73*% of the aggregate fair value was concentrated in* five *companies (American Express Company – $*20.5 *billion; Apple Inc. – $*126.5 *billion; Bank of America Corporation – $*31.2 *billion; The Coca-Cola Company – $*22.4 *billion and Chevron Corporation – $*24.4 billion).

		Cost Basis				Net Unrealized Gains				Fair Value
December 31, 2021*
Banks, insurance and finance		$	26,822			$	62,236			$	89,058
Consumer products			36,076				154,945				191,021
Commercial, industrial and other			41,707				28,933				70,640
		$	104,605			$	246,114			$	350,719

*** Approximately 73*% of the aggregate fair value was concentrated in* four *companies (American Express Company – $*24.8 *billion; Apple Inc. – $*161.2 *billion; Bank of America Corporation – $*46.0 *billion and The Coca-Cola Company – $*23.7 billion).

Notes to Consolidated Financial Statements (Continued)

Note 4. Investments in equity securities (Continued)

As of September 30, 2022, we owned 151.6 million shares of American Express Company (“American Express”) common stock representing 20.3% of the American Express outstanding common stock. Since 1995, we have been party to an agreement with American Express whereby we agreed to vote a significant portion of our shares in accordance with the recommendations of the American Express Board of Directors and we have agreed to passivity commitments as requested by the Board of Governors of the Federal Reserve System, which collectively, in our judgment, restrict our ability to exercise significant influence over the operating and financial policies of American Express. Accordingly, we have not applied the equity method of accounting to our investment in American Express and continue to record our investment at fair value.

During the first six months of 2022, we acquired approximately 17% of the outstanding common stock of Occidental Petroleum Corporation (“Occidental”) and in the third quarter of 2022, we acquired additional shares such that our aggregate voting interest exceeded 20% on August 4, 2022. We adopted the equity method with respect to our investment in Occidental common stock as of that date and included this investment in equity method investments at September 30, 2022. See Note 5. We continue to report our investments in Occidental Cumulative Perpetual Preferred Stock and Occidental common stock warrants at fair value as equity securities, as such interests are not in-substance common stock under GAAP and are not eligible for the equity method.

Our investment in Occidental preferred stock has an aggregate liquidation value of $10 billion and our investment in Occidental warrants allows us to purchase up to 83.86 million shares of Occidental common stock at an exercise price of $59.62 per share. The preferred stock accrues dividends at 8% per annum and is redeemable at the option of Occidental commencing in 2029 at a redemption price equal to 105% of the liquidation preference, plus any accumulated and unpaid dividends and is mandatorily redeemable under specified events. The warrants are exercisable in whole or in part until one year after the redemption of the preferred stock.

Note 5. Equity method investments

Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these are our investments in the common stock of The Kraft Heinz Company (“Kraft Heinz”) and, as of August 4, 2022, Occidental. We own 26.5% of Kraft Heinz common stock and we own 20.9% of Occidental common stock, which excludes the potential effect of the exercise of Occidental common stock warrants. See Note 4.

Kraft Heinz manufactures and markets food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Occidental is an international energy company, including oil and natural gas exploration, development and production, and chemicals manufacturing businesses. Occidental’s midstream businesses purchase, market, gather, process, transport and store various oil, natural gas, carbon dioxide and other products. We anticipate Occidental’s financial information will not be available in time for concurrent reporting in our consolidated financial statements. Therefore, we will report the equity method effects for Occidental on a one-quarter lag. Our earnings in the fourth quarter of 2022 will include our equity method share of Occidental's third quarter earnings.

The common stock of Kraft Heinz and Occidental are publicly traded. The fair values and carrying values of these two investments in addition to the carrying values of our other significant equity method investments are summarized as follows (in millions). We evaluated our investment in Kraft Heinz for impairment as of September 30, 2022. Based on the prevailing facts and circumstances, we concluded recognition of an impairment loss in earnings was not required.

	Carrying Value								Fair Value
	September 30, 2022				December 31, 2021				September 30, 2022				December 31, 2021
Kraft Heinz	$	12,769			$	13,112			$	10,853			$	11,683
Occidental		11,180				—				11,943				—
Other		4,765				4,263
	$	28,714			$	17,375

Notes to Consolidated Financial Statements (Continued)

Note 5. Equity method investments (Continued)

Our earnings and distributions received from equity method investments are summarized in the table below (in millions).

	Equity in Earnings																Distributions Received
	Third Quarter								First Nine Months								Third Quarter								First Nine Months
	2022				2021				2022				2021				2022				2021				2022				2021
Kraft Heinz	$	114			$	194			$	391			$	337			$	131			$	131			$	391			$	391
Occidental		—				—				—				—				—				—				—				—
Other		327				183				657				438				94				55				231				1,037
	$	441			$	377			$	1,048			$	775			$	225			$	186			$	622			$	1,428

As previously indicated, we will report the equity method effects for Occidental on a one-quarter lag. Our equity method share of Occidental's earnings will be reported in our earnings beginning in the fourth quarter of 2022. Distributions from other investees in the first nine months of 2021 included a special distribution of $849 million from Pilot Travel Centers (“Pilot”).

Summarized consolidated financial information of Kraft Heinz follows (in millions).

	September 24, 2022				December 25, 2021
Assets	$	89,992			$	93,394
Liabilities		41,649				43,942

	Third Quarter								First Nine Months
	2022				2021				2022				2021
Sales	$	6,505			$	6,324			$	19,104			$	19,333
Net earnings attributable to Kraft Heinz common shareholders		432				733				1,473				1,269

Summarized consolidated financial information of Occidental follows (in millions).

	June 30, 2022				December 31, 2021
Assets	$	74,221			$	75,036
Liabilities		46,391				54,709

	Second Quarter								First Six Months
	2022				2021				2022				2021
Total revenues and other income	$	10,735			$	6,010			$	19,268			$	11,489
Net earnings (loss) attributable to Occidental common shareholders		3,555				(97	)			8,231				(443	)

Other investments that we account for pursuant to the equity method include Berkadia Commercial Mortgage LLC (“Berkadia”), Pilot, Electric Transmission Texas, LLC (“ETT”) and Iroquois Gas Transmission System L.P. (“Iroquois”). Additional information concerning these investments follows.

We own a 50% interest in Berkadia, with Jefferies Financial Group Inc. (“Jefferies”) owning the other 50% interest. Berkadia provides capital solutions, investment sales advisory and mortgage servicing for multifamily and commercial real estate. Berkadia’s commercial paper borrowing capacity (currently limited to $1.5 billion) is supported by a surety policy issued by a Berkshire insurance subsidiary. Jefferies is obligated to indemnify us for one-half of any losses incurred under the policy. Berkshire Hathaway Energy (“BHE”) subsidiaries own 50% noncontrolling interests in ETT, an owner and operator of electric transmission assets in Texas, and Iroquois, an owner and operator of natural gas pipeline assets in New York and Connecticut.

We own a 38.6% interest in Pilot, headquartered in Knoxville, Tennessee. Pilot operates travel centers in North America through more than 800 retail locations across 44 U.S. states and six Canadian provinces and is a leading supplier of fuel to third parties. We have an agreement to acquire an additional 41.4% interest in Pilot in the first quarter of 2023 for a value to be determined, based upon Pilot's adjusted earnings in 2022 and its net debt at December 31, 2022. As a result, Berkshire will become the majority owner of Pilot at that time.

Notes to Consolidated Financial Statements (Continued)

Note 6. Investment and derivative contract gains/losses

Investment and derivative contract gains/losses in the third quarter and first nine months of 2022 and 2021 are summarized as follows (in millions).

		Third Quarter								First Nine Months
		2022				2021				2022				2021
Investment gains (losses):
Equity securities:
Change in unrealized investment gains (losses) during the period on securities held at the end of the period		$	(12,902	)		$	4,759			$	(80,496	)		$	36,163
Investment gains (losses) on securities sold during the period			(165	)			75				(1,085	)			889
			(13,067	)			4,834				(81,581	)			37,052
Fixed maturity securities:
Gross realized gains			6				24				18				59
Gross realized losses			(433	)			(7	)			(509	)			(20	)
Other			(6	)			—				(17	)			144
Investment gains (losses)			(13,500	)			4,851				(82,089	)			37,235
Derivative contract gains (losses)			35				70				(273	)			780
		$	(13,465	)		$	4,921			$	(82,362	)		$	38,015

Equity securities gains and losses include unrealized gains and losses from changes in fair values during the period on equity securities we still own, as well as gains and losses on securities we sold during the period. As reflected in the Consolidated Statements of Cash Flows, we received proceeds from sales of equity securities of approximately $17.3 billion in the first nine months of 2022 and $12.0 billion in the first nine months of 2021. In the preceding table, investment gains and losses on equity securities sold during the period represent the difference between the sales proceeds and the fair value of the equity securities sold at the beginning of the applicable period or, if later, the purchase date. Taxable gains/losses on equity securities sold are generally the difference between the proceeds from sales and original cost. Equity securities sold produced taxable gains of $3 million in the third quarter and taxable losses of $660 million in the first nine months of 2022 compared to taxable gains of $941 million in the third quarter and $2.9 billion in the first nine months of 2021.

Our derivative contract gains and losses derive from equity index put option contracts. As of September 30, 2022, we had four open contracts, which had an aggregate fair value liability of less than $1 million and an aggregate notional value of $1.6 billion.

Notes to Consolidated Financial Statements (Continued)

Note 7. Loans and finance receivables

Loans and finance receivables are summarized as follows (in millions).

	September 30, 2022				December 31, 2021
Loans and finance receivables before allowances and discounts	$	23,442			$	22,065
Allowances for credit losses		(785	)			(765	)
Unamortized acquisition discounts and points		(563	)			(549	)
	$	22,094			$	20,751

Loans and finance receivables are principally manufactured home loans, and to a lesser extent, site-built home loans and commercial loans. Reconciliations of the allowance for credit losses on loans and finance receivables for the first nine months of 2022 and 2021 follow (in millions).

	First Nine Months
	2022				2021
Balance at beginning of year	$	765			$	712
Provision for credit losses		45				65
Charge-offs, net of recoveries		(25	)			(33	)
Balance at September 30	$	785			$	744

As of September 30, 2022, substantially all manufactured and site-built home loans were evaluated collectively for impairment. As of September 30, 2022, we considered approximately 97% of these loans to be current as to payment status. A summary of performing and non-performing home loans before discounts and allowances by year of loan origination as of September 30, 2022 follows (in millions).

	Origination Year
	2022				2021				2020				2019				2018				Prior				Total
Performing	$	4,268			$	3,696			$	2,883			$	2,037			$	1,544			$	7,205			$	21,633
Non-performing		4				7				9				8				7				42				77
	$	4,272			$	3,703			$	2,892			$	2,045			$	1,551			$	7,247			$	21,710

We are also party to two commercial loan agreements with an aggregate carrying value of $1.7 billion at September 30, 2022 and $1.9 billion at December 31, 2021. The larger of these loans is with Seritage Growth Properties (“Seritage”), which had a carrying value of $1.27 billion as of September 30, 2022 and $1.44 billion as of December 31, 2021. The Seritage loan is pursuant to a $2.0 billion term loan facility and the outstanding loan is secured by mortgages on its real estate properties. The Seritage loan agreement allows optional loan prepayments without penalty and further provides the option to extend the maturity of the loan to July 31, 2025, if the outstanding principal has been reduced to $800 million by the original expiration date of July 31, 2023. Each of these loans is current as to payment status.

Note 8. Other receivables

Other receivables are comprised of the following (in millions).

	September 30, 2022				December 31, 2021
Insurance and other:
Insurance premiums receivable	$	17,815			$	15,050
Reinsurance recoverables		4,793				4,900
Trade receivables		14,448				12,971
Other		4,051				3,146
Allowances for credit losses		(724	)			(679	)
	$	40,383			$	35,388
Railroad, utilities and energy:
Trade receivables	$	4,362			$	3,678
Other		765				650
Allowances for credit losses		(142	)			(151	)
	$	4,985			$	4,177

Notes to Consolidated Financial Statements (Continued)

Note 8. Other receivables (Continued)

Provisions for credit losses in the first nine months with respect to receivables summarized above were $328 million in 2022 and $335 million in 2021. Charge-offs, net of recoveries, in the first nine months were $284 million in 2022 and $279 million in 2021.

Note 9. Inventories

Inventories are comprised of the following (in millions).

	September 30, 2022				December 31, 2021
Raw materials	$	6,473			$	5,743
Work in process and other		3,750				3,192
Finished manufactured goods		5,776				4,530
Goods acquired for resale		9,103				7,489
	$	25,102			$	20,954

Note 10. Property, plant and equipment

A summary of property, plant and equipment of our insurance and other businesses follows (in millions).

		September 30, 2022				December 31, 2021
Land, buildings and improvements		$	14,089			$	14,070
Machinery and equipment			26,072				26,063
Furniture, fixtures and other			4,968				4,640
			45,129				44,773
Accumulated depreciation			(24,751	)			(23,939	)
		$	20,378			$	20,834

A summary of property, plant and equipment of railroad and utilities and energy businesses follows (in millions). The utility generation, transmission and distribution systems and interstate natural gas pipeline assets are owned by regulated public utility and natural gas pipeline subsidiaries.

		September 30, 2022				December 31, 2021
Railroad:
Land, track structure and other roadway		$	66,744			$	65,843
Locomotives, freight cars and other equipment			15,989				13,822
Construction in progress			1,366				1,027
			84,099				80,692
Accumulated depreciation			(17,530	)			(14,978	)
			66,569				65,714
Utilities and energy:
Utility generation, transmission and distribution systems			90,756				90,223
Interstate natural gas pipeline assets			17,882				17,423
Independent power plants and other assets			14,352				13,695
Construction in progress			5,198				4,196
			128,188				125,537
Accumulated depreciation			(37,285	)			(35,721	)
			90,903				89,816
		$	157,472			$	155,530

Depreciation expense for the first nine months of 2022 and 2021 is summarized below (in millions).

		First Nine Months
		2022				2021
Insurance and other		$	1,690			$	1,725
Railroad, utilities and energy			4,646				4,485
		$	6,336			$	6,210

Notes to Consolidated Financial Statements (Continued)

Note 11. Equipment held for lease

Equipment held for lease includes railcars, aircraft, over-the-road trailers, intermodal tank containers, cranes, storage units and furniture. Equipment held for lease is summarized below (in millions).

	September 30, 2022				December 31, 2021
Railcars	$	9,556			$	9,448
Aircraft		10,089				9,234
Other		5,120				5,053
		24,765				23,735
Accumulated depreciation		(9,626	)			(8,817	)
	$	15,139			$	14,918

Depreciation expense for equipment held for lease in the first nine months was $900 million in 2022 and $861 million in 2021. Fixed and variable operating lease revenues for the third quarter and first nine months of 2022 and 2021 are summarized below (in millions).

	Third Quarter								First Nine Months
	2022				2021				2022				2021
Fixed lease revenue	$	1,344			$	1,151			$	3,796			$	3,318
Variable lease revenue		615				414				1,722				1,018
	$	1,959			$	1,565			$	5,518			$	4,336

Note 12. Goodwill and other intangible assets

Reconciliations of the changes in the carrying value of goodwill for the first nine months of 2022 and for the year ended December 31, 2021 follow (in millions).

		September 30, 2022				December 31, 2021
Balance at beginning of year		$	73,875			$	73,734
Business acquisitions			78				353
Other, including foreign currency translation			(618	)			(212	)
Balance at end of period*		$	73,335			$	73,875

*** *Net of accumulated goodwill impairments of $*11.0 billion as of September 30, 2022 and December 31, 2021.

The gross carrying amounts and accumulated amortization of other intangible assets are summarized below (in millions).

		September 30, 2022												December 31, 2021
		Gross carrying amount				Accumulated amortization				Net carrying value				Gross carrying amount				Accumulated amortization				Net carrying value
Insurance and other:
Customer relationships		$	27,337			$	6,957			$	20,380			$	27,335			$	6,450			$	20,885
Trademarks and trade names			5,158				816				4,342				5,176				802				4,374
Patents and technology			4,957				3,741				1,216				4,763				3,484				1,279
Other			3,280				1,480				1,800				3,390				1,442				1,948
		$	40,732			$	12,994			$	27,738			$	40,664			$	12,178			$	28,486
Railroad, utilities and energy:
Customer relationships		$	678			$	421			$	257			$	678			$	396			$	282
Trademarks, trade names and other			1,015				182				833				1,015				146				869
		$	1,693			$	603			$	1,090			$	1,693			$	542			$	1,151

Notes to Consolidated Financial Statements (Continued)

Note 12. Goodwill and other intangible assets (Continued)

Intangible asset amortization expense in the first nine months was $905 million in 2022 and $942 million in 2021. Intangible assets with indefinite lives were $18.4 billion as of September 30, 2022 and $18.5 billion as of December 31, 2021 and primarily related to certain customer relationships and trademarks and trade names.

Note 13. Unpaid losses and loss adjustment expenses

Our liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. A reconciliation of the changes in claim liabilities, excluding liabilities under retroactive reinsurance contracts (see Note 14), for each of the nine-month periods ending September 30, 2022 and 2021 follows (in millions).

	2022				2021
Balances at beginning of year:
Gross liabilities	$	86,664			$	79,854
Reinsurance recoverable on unpaid losses		(2,960	)			(2,912	)
Net liabilities		83,704				76,942
Incurred losses and loss adjustment expenses:
Current accident year		44,472				38,447
Prior accident years		(2,141	)			(2,151	)
Total		42,331				36,296
Paid losses and loss adjustment expenses:
Current accident year		(17,543	)			(15,277	)
Prior accident years		(18,564	)			(15,076	)
Total		(36,107	)			(30,353	)
Foreign currency effect		(1,044	)			(119	)
Balances at September 30:
Net liabilities		88,884				82,766
Reinsurance recoverable on unpaid losses		2,758				2,988
Gross liabilities	$	91,642			$	85,754

Incurred losses and loss adjustment expenses shown in the preceding table were recorded in earnings and related to insured events occurring in the current year (“current accident year”) and events occurring in all prior years (“prior accident years”). Incurred and paid losses and loss adjustment expenses are net of reinsurance recoveries. Current accident year incurred losses in the first nine months of 2022 and 2021 included approximately $4.0 billion and $2.7 billion, respectively, from significant catastrophe events (losses in excess of $100 million per event). Significant catastrophe events in the first nine months included Hurricane Ian ($3.4 billion) and floods in Australia and South Africa in 2022 and Winter Storm Uri, Hurricane Ida ($1.5 billion) and floods in Europe in 2021.

In the first nine months, we recorded net reductions of estimated ultimate liabilities for prior accident years of $2.1 billion in 2022 and $2.2 billion in 2021, which produced corresponding reductions in incurred losses and loss adjustment expenses in those periods. These reductions, as percentages of the net liabilities at the beginning of each year, were 2.6% in 2022 and 2.8% in 2021.

Estimated ultimate liabilities for prior accident years from primary insurance in the first nine months were reduced by $734 million in 2022 and $1.6 billion in 2021. The reductions in each period derived primarily from private passenger automobile, medical professional liability and workers’ compensation claims. Estimated ultimate liabilities for prior years attributable to property and casualty reinsurance in the first nine months decreased $1.4 billion in 2022 and $564 million in 2021.

Notes to Consolidated Financial Statements (Continued)

Note 14. Retroactive reinsurance contracts

Retroactive reinsurance policies provide indemnification of losses and loss adjustment expenses of short-duration insurance contracts with respect to underlying loss events that occurred prior to the contract inception date. Claims payments may commence immediately after the contract date or, when applicable, after a contractual retention amount has been reached. Reconciliations of the changes in estimated liabilities for retroactive reinsurance unpaid losses and loss adjustment expenses (“claim liabilities”) and related deferred charges for each of the nine-month periods ending September 30, 2022 and 2021 follow (in millions).

	2022								2021
	Unpaid losses and loss adjustment expenses				Deferred charges - retroactive reinsurance				Unpaid losses and loss adjustment expenses				Deferred charges - retroactive reinsurance
Balances at beginning of year	$	38,256			$	(10,639	)		$	40,966			$	(12,441	)
Incurred losses and loss adjustment expenses:
Current year contracts		—				—				82				—
Prior years’ contracts		(23	)			649				(9	)			709
Total		(23	)			649				73				709
Paid losses and loss adjustment expenses		(1,567	)			—				(1,318	)			—
Balances at September 30	$	36,666			$	(9,990	)		$	39,721			$	(11,732	)
Incurred losses and loss adjustment expenses, net of deferred charges	$	626							$	782

In the preceding table, classifications of incurred losses and loss adjustment expenses are based on the inception dates of the contracts, which reflect when our exposure to losses began. Incurred losses and loss adjustment expenses in the first nine months for prior years’ contracts were $626 million in 2022 and $700 million in 2021 and included recurring amortization of deferred charges and the effect of changes in the timing and amount of expected future loss payments. Currently, our largest retroactive reinsurance contract is between our subsidiary, National Indemnity Company, and certain subsidiaries of American International Group, Inc. (collectively, “AIG”). Our estimated claim liabilities with regard to the AIG contract were approximately $14.8 billion at September 30, 2022 and $15.8 billion at December 31, 2021. Deferred charges related to the AIG contract were $4.14 billion at September 30, 2022 and $4.45 billion at December 31, 2021.

Note 15. Notes payable and other borrowings

Notes payable and other borrowings are summarized below (in millions). The weighted average interest rates and maturity date ranges shown in the following tables are based on borrowings as of September 30, 2022.

		Weighted Average Interest Rate				September 30, 2022				December 31, 2021
Insurance and other:
Berkshire Hathaway Inc. (“Berkshire”):
U.S. Dollar denominated due 2023-2047			3.3	%		$	6,227			$	6,820
Euro denominated due 2023-2041			1.0	%			6,722				7,792
Japanese Yen denominated due 2023-2060			0.6	%			6,289				6,797
Berkshire Hathaway Finance Corporation (“BHFC”):
U.S. Dollar denominated due 2027-2052			3.6	%			14,456				10,758
Great Britain Pound denominated due 2039-2059			2.5	%			1,920				2,325
Euro denominated due 2030-2034			1.8	%			1,219				—
Other subsidiary borrowings due 2022-2045			4.1	%			4,328				4,438
Subsidiary short-term borrowings			4.7	%			374				342
						$	41,535			$	39,272

Notes to Consolidated Financial Statements (Continued)

Note 15. Notes payable and other borrowings (Continued)

In January 2022, Berkshire repaid $600 million of maturing senior notes and issued ¥128.5 billion (approximately $1.1 billion) of senior notes with maturity dates ranging from 2027 to 2052 and a weighted average interest rate of 0.5%. Borrowings of BHFC, a wholly owned finance subsidiary of Berkshire, consist of senior unsecured notes used to fund manufactured housing loans originated or acquired and equipment held for lease of certain subsidiaries. BHFC borrowings are fully and unconditionally guaranteed by Berkshire. In March 2022, BHFC issued $4.5 billion of senior notes with maturity dates ranging from 2027 to 2052 with a weighted average interest rate of 3.4% and €1.25 billion (approximately $1.4 billion) of senior notes maturing in 2030 and 2034 with a weighted average interest rate of 1.8%. In May 2022, BHFC repaid $775 million of maturing senior notes.

The carrying values of Berkshire and BHFC non-U.S. Dollar denominated senior notes (€8.15 billion, £1.75 billion and ¥914 billion par at September 30, 2022) reflect the applicable exchange rates as of each balance sheet date. The effects of changes in foreign currency exchange rates during the period are recorded in earnings as a component of selling, general and administrative expenses. Changes in the exchange rates resulted in pre-tax gains of $1.2 billion in the third quarter and $3.3 billion in the first nine months of 2022 as compared to $264 million in the third quarter and $939 million in the first nine months of 2021.

Berkshire also guarantees debt of other subsidiaries, aggregating approximately $3.7 billion at September 30, 2022. Generally, Berkshire’s guarantee of a subsidiary’s debt obligation is an absolute, unconditional and irrevocable guarantee for the full and prompt payment when due of all payment obligations.

		Weighted Average Interest Rate				September 30, 2022				December 31, 2021
Railroad, utilities and energy:
Berkshire Hathaway Energy Company (“BHE”) and subsidiaries:
BHE senior unsecured debt due 2023-2053			4.3	%		$	13,992			$	13,003
Subsidiary and other debt due 2022-2064			4.2	%			36,226				36,759
Short-term borrowings			4.2	%			1,441				2,009
Burlington Northern Santa Fe ("BNSF") and subsidiaries due 2022-2097			4.5	%			23,302				23,219
						$	74,961			$	74,990

BHE subsidiary debt represents amounts issued pursuant to separate financing agreements. Substantially all of the assets of certain BHE subsidiaries are, or may be, pledged or encumbered to support or otherwise secure such debt. These borrowing arrangements generally contain various covenants, which pertain to leverage ratios, interest coverage ratios and/or debt service coverage ratios. In April 2022, BHE issued $1.0 billion of 4.6% senior notes due in 2053. During the first nine months of 2022, BHE subsidiaries issued approximately $1.3 billion of variable and fixed rate term debt with a weighted average interest rate of 3.9% as of September 30 and maturity dates ranging from 2024 to 2052.

BNSF’s borrowings are primarily senior unsecured debentures. In June 2022, BNSF issued $1.0 billion of 4.45% debentures due in 2053. During the first nine months of 2022, BNSF repaid $900 million of term debt. As of September 30, 2022, BNSF, BHE and their subsidiaries were in compliance with all applicable debt covenants. Berkshire does not guarantee any debt, borrowings or lines of credit of BNSF, BHE or their subsidiaries.

Our subsidiaries have unused lines of credit and commercial paper capacity to support short-term borrowing programs and provide additional liquidity. Unused lines of credit were approximately $10.7 billion at September 30, 2022, which included approximately $9.2 billion related to BHE and its subsidiaries.

Notes to Consolidated Financial Statements (Continued)

Note 16. Fair value measurements

Our financial assets and liabilities are summarized below as of September 30, 2022 and December 31, 2021, with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, U.S. Treasury Bills, other receivables and accounts payable, accruals and other liabilities are considered to be reasonable estimates of their fair values.

		Carrying Value				Fair Value				Quoted Prices (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
September 30, 2022
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$	8,775			$	8,775			$	8,740			$	35			$	—
Foreign governments			8,505				8,505				8,207				298				—
Corporate bonds			1,029				1,029				—				1,029				—
Other			293				293				—				293				—
Investments in equity securities			306,167				306,167				294,094				7				12,066
Investment in Kraft Heinz & Occidental common stock			23,949				22,796				22,796				—				—
Loans and finance receivables			22,094				22,659				—				1,744				20,915
Derivative contract assets (1)			731				731				68				593				70
Derivative contract liabilities (1)			261				261				2				133				126
Notes payable and other borrowings:
Insurance and other			41,535				36,362				—				36,314				48
Railroad, utilities and energy			74,961				66,991				—				66,991				—
December 31, 2021
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$	3,303			$	3,303			$	3,261			$	42			$	—
Foreign governments			10,994				10,994				10,286				708				—
Corporate bonds			1,774				1,774				—				1,774				—
Other			363				363				—				363				—
Investments in equity securities			350,719				350,719				339,225				8				11,486
Investment in Kraft Heinz common stock			13,112				11,683				11,683				—				—
Loans and finance receivables			20,751				22,174				—				2,178				19,996
Derivative contract assets (1)			329				329				6				230				93
Derivative contract liabilities (1)			376				376				2				150				224
Notes payable and other borrowings:
Insurance and other			39,272				42,339				—				42,292				47
Railroad, utilities and energy			74,990				87,065				—				87,065				—

(1)

Assets are included in other assets and liabilities are included in accounts payable, accruals and other liabilities.

Notes to Consolidated Financial Statements (Continued)

Note 16. Fair value measurements (Continued)

The fair values of substantially all of our financial instruments were measured using market or income approaches. The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments of the issuer or entities in the same industry sector.

Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and it may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets or liabilities.

Reconciliations of significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the nine months ended September 30, 2022 and 2021 follow (in millions).

	Balance at beginning of year				Gains included in earnings				Acquisitions, dispositions and settlements				Transfers out of Level 3				Balance at September 30
Investments in equity securities:
2022	$	11,480			$	581			$	—			$	—			$	12,061
2021		8,978				1,713				1,100				—				11,791
Equity index put option contract liabilities:
2021		(1,065	)			780				(1	)			—				(286	)

Quantitative information as of September 30, 2022 with respect to significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) follows (dollars in millions).

		Fair Value				Principal Valuation Techniques		Unobservable Inputs		Weighted Average
Investments in equity securities:
Preferred stock		$	9,956			Discounted cash flow		Expected duration		7 years
								Discount for transferability restrictions and subordination		372 bps
Common stock warrants			2,105			Warrant pricing model		Expected duration		7 years
								Volatility		39%

Investments in equity securities in the preceding table include our investments in certain preferred stocks and common stock warrants that do not have readily determinable market values as defined under GAAP. These investments are subject to contractual restrictions on transferability and may contain provisions that prevent us from economically hedging our investments. We applied discounted cash flow techniques in valuing the preferred stock and we made assumptions regarding the expected duration of the investment and the effects of subordination in liquidation. In valuing the common stock warrants, we used a warrant valuation model. While most of the inputs to the model are observable, we made assumptions regarding the expected duration and volatility of the warrants.

Notes to Consolidated Financial Statements (Continued)

Note 17. Common stock

Changes in Berkshire’s issued, treasury and outstanding common stock during the first nine months of 2022 are shown in the table below. In addition to our common stock, 1,000,000 shares of preferred stock are authorized, but none are issued.

	**Class A, $**5 **Par Value (**1,650,000 shares authorized)										**Class B, $**0.0033 **Par Value (**3,225,000,000 shares authorized)
	Issued			Treasury			Outstanding				Issued			Treasury			Outstanding
Balances at December 31, 2021		665,901			(48,788	)		617,113				1,488,292,852			(197,818,349	)		1,290,474,503
Conversions of Class A to Class B common stock		(12,093	)		—			(12,093	)			18,139,500			—			18,139,500
Treasury stock acquired		—			(6,818	)		(6,818	)			—			(6,850,133	)		(6,850,133	)
Balances at September 30, 2022		653,808			(55,606	)		598,202				1,506,432,352			(204,668,482	)		1,301,763,870

Each Class A common share is entitled to one vote per share. Class B common stock possesses dividend and distribution rights equal to one-fifteen-hundredth (1/1,500) of such rights of Class A common stock. Each Class B common share possesses voting rights equal to one-ten-thousandth (1/10,000) of the voting rights of a Class A share. Unless otherwise required under Delaware General Corporation Law, Class A and Class B common shares vote as a single class. Each share of Class A common stock is convertible, at the option of the holder, into 1,500 shares of Class B common stock. Class B common stock is not convertible into Class A common stock. On an equivalent Class A common stock basis, there were 1,466,045 shares outstanding as of September 30, 2022 and 1,477,429 shares outstanding as of December 31, 2021.

Since we have two classes of common stock, we provide earnings per share data on the Consolidated Statements of Earnings for average equivalent Class A shares outstanding and average equivalent Class B shares outstanding. Class B shares are economically equivalent to one-fifteen-hundredth (1/1,500) of a Class A share. Average equivalent Class A shares outstanding represents average Class A shares outstanding plus one-fifteen-hundredth (1/1,500) of the average Class B shares outstanding. Average equivalent Class B shares outstanding represents average Class B shares outstanding plus 1,500 times the average Class A shares outstanding.

Berkshire’s common stock repurchase program permits Berkshire to repurchase its Class A and Class B shares any time that Warren Buffett, Berkshire’s Chairman of the Board and Chief Executive Officer, and Charlie Munger, Vice Chairman of the Board, believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined. The program continues to allow share repurchases in the open market or through privately negotiated transactions and does not specify a maximum number of shares to be repurchased. However, repurchases will not be made if they would reduce the total value of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bills holdings below $30 billion. The repurchase program does not obligate Berkshire to repurchase any specific dollar amount or number of Class A or Class B shares and there is no expiration date to the program.

Note 18. Income taxes

Our consolidated effective income tax rates were 37.1% in the third quarter and 23.5% in the first nine months of 2022 compared to 14.7% in the third quarter and 18.8% in the first nine months of 2021. Our effective income tax rate normally reflects recurring benefits from dividends-received deductions applicable to investments in certain equity securities and production tax credits related to wind-powered electricity generation placed in service in the U.S. Our periodic effective income tax rate will also vary due to the changes in mix of pre-tax earnings, including investment gains or losses with respect to our investments in equity securities, the amount of non-deductible goodwill impairment charges and other expenses and the underlying income tax rates applicable in the various taxing jurisdictions.

Notes to Consolidated Financial Statements (Continued)

Note 19. Accumulated other comprehensive income

A summary of the net changes in after-tax accumulated other comprehensive income attributable to Berkshire Hathaway shareholders for the nine months ending September 30, 2022 and 2021 follows (in millions).

		Unrealized appreciation of fixed maturity securities, net				Foreign currency translation				Defined benefit pension plans				Other				Accumulated other comprehensive income
First nine months of 2022
Balance at beginning of year		$	369			$	(4,092	)		$	(347	)		$	43			$	(4,027	)
Other comprehensive income, net			(767	)			(3,676	)			47				189				(4,207	)
Balance at end of period		$	(398	)		$	(7,768	)		$	(300	)		$	232			$	(8,234	)
First nine months of 2021
Balance at beginning of year		$	536			$	(3,082	)		$	(1,645	)		$	(52	)		$	(4,243	)
Other comprehensive income, net			(126	)			(619	)			112				42				(591	)
Balance at end of period		$	410			$	(3,701	)		$	(1,533	)		$	(10	)		$	(4,834	)

Note 20. Supplemental cash flow information

A summary of supplemental cash flow information is presented in the following table (in millions).

		First Nine Months
		2022				2021
Cash paid during the period for:
Income taxes		$	3,474			$	4,002
Interest:
Insurance and other			917				1,040
Railroad, utilities and energy			2,323				2,335

Note 21. Contingencies and commitments

We are parties in a variety of legal actions that routinely arise out of the normal course of business, including legal actions seeking to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. We do not believe that such normal and routine litigation will have a material effect on our financial condition or results of operations. Berkshire and certain of its subsidiaries are also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We believe that any liability that may arise as a result of other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.

On March 20, 2022, Berkshire entered into a definitive agreement and plan of merger with Alleghany Corporation (“Alleghany”) to acquire all of Alleghany’s outstanding common stock for cash consideration of approximately $11.6 billion. Following the receipt of Alleghany shareholder approval on June 9, 2022 and all required regulatory approvals, the acquisition was completed on October 19, 2022. The consideration paid was funded by existing cash balances. Alleghany operates a group of property and casualty reinsurance and insurance businesses. It also owns a portfolio of non-financial businesses.

Given the proximity of the Alleghany acquisition date to the date these interim Consolidated Financial Statements were issued, it was impracticable to provide an initial estimate of the fair values of identifiable assets acquired, liabilities assumed and residual goodwill or proforma information. We expect to provide disclosures of preliminary values of identifiable assets acquired and liabilities assumed as of the acquisition date as well as proforma information, if material, in our Consolidated Financial Statements for the year ending December 31, 2022. Alleghany’s most recently available historical consolidated financial statements are as of September 30, 2022. As of that date, Alleghany’s total assets and liabilities were $31.2 billion and $23.4 billion, respectively.

In June 2022, BHE acquired the BHE common stock held by Greg Abel, Berkshire’s Vice Chairman - non-insurance operations, for $870 million. The purchase was pursuant to the terms of a shareholders agreement between Berkshire, BHE and BHE’s non-controlling shareholders. Berkshire recorded a charge of $362 million to capital in excess of par value for the excess of the consideration paid over the carrying value of the acquired noncontrolling interest.

Notes to Consolidated Financial Statements (Continued)

Note 22. Revenues from contracts with customers

We recognize revenue when a good or service is transferred to a customer. A good or service is transferred when or as the customer obtains control of that good or service. Revenues are based on the consideration we expect to receive in connection with our promises to deliver goods and services to our customers. The following tables summarize customer contract revenues disaggregated by reportable segment and the source of the revenue for the third quarter and first nine months of 2022 and 2021 (in millions). Other revenues, which are not considered to be revenues from contracts with customers under GAAP, are primarily insurance premiums earned, interest, dividend and other investment income and leasing revenues.

		Manufacturing				McLane				Service and Retailing				BNSF				Berkshire Hathaway Energy				Insurance, Corporate and other				Total
Three months ending September 30, 2022
Manufactured products:
Industrial and commercial products		$	6,145			$	—			$	51			$	—			$	—			$	—			$	6,196
Building products			5,928				—				—				—				—				—				5,928
Consumer products			4,753				—				—				—				—				—				4,753
Grocery and convenience store distribution			—				8,315				—				—				—				—				8,315
Food and beverage distribution			—				4,946				—				—				—				—				4,946
Auto sales			—				—				2,686				—				—				—				2,686
Other retail and wholesale distribution			803				—				4,189				—				—				—				4,992
Service			328				277				1,006				6,646				1,328				—				9,585
Electricity and natural gas			—				—				—				—				5,905				—				5,905
Total			17,957				13,538				7,932				6,646				7,233				—				53,306
Other revenues			1,012				32				1,609				17				294				20,664				23,628
		$	18,969			$	13,570			$	9,541			$	6,663			$	7,527			$	20,664			$	76,934
Nine months ending September 30, 2022
Manufactured products:
Industrial and commercial products		$	18,219			$	—			$	148			$	—			$	—			$	—			$	18,367
Building products			17,317				—				—				—				—				—				17,317
Consumer products			15,355				—				—				—				—				—				15,355
Grocery and convenience store distribution			—				24,000				—				—				—				—				24,000
Food and beverage distribution			—				14,510				—				—				—				—				14,510
Auto sales			—				—				7,888				—				—				—				7,888
Other retail and wholesale distribution			2,343				—				12,629				—				—				—				14,972
Service			894				739				3,090				19,173				4,001				—				27,897
Electricity and natural gas			—				—				—				—				15,359				—				15,359
Total			54,128				39,249				23,755				19,173				19,360				—				155,665
Other revenues			2,962				97				4,470				46				658				60,026				68,259
		$	57,090			$	39,346			$	28,225			$	19,219			$	20,018			$	60,026			$	223,924

Notes to Consolidated Financial Statements (Continued)

Note 22. Revenues from contracts with customers (Continued)

		Manufacturing				McLane				Service and Retailing				BNSF				Berkshire Hathaway Energy				Insurance, Corporate and other				Total
Three months ending September 30, 2021
Manufactured products:
Industrial and commercial products		$	5,600			$	—			$	43			$	—			$	—			$	—			$	5,643
Building products			5,005				—				—				—				—				—				5,005
Consumer products			4,758				—				—				—				—				—				4,758
Grocery and convenience store distribution			—				7,933				—				—				—				—				7,933
Food and beverage distribution			—				4,478				—				—				—				—				4,478
Auto sales			—				—				2,423				—				—				—				2,423
Other retail and wholesale distribution			742				—				3,913				—				—				—				4,655
Service			400				175				1,073				5,747				1,586				—				8,981
Electricity and natural gas			—				—				—				—				5,138				—				5,138
Total			16,505				12,586				7,452				5,747				6,724				—				49,014
Other revenues			951				26				1,202				14				289				19,087				21,569
		$	17,456			$	12,612			$	8,654			$	5,761			$	7,013			$	19,087			$	70,583
Nine months ending September 30, 2021
Manufactured products:
Industrial and commercial products		$	16,549			$	—			$	142			$	—			$	—			$	—			$	16,691
Building products			14,518				—				—				—				—				—				14,518
Consumer products			13,525				—				—				—				—				—				13,525
Grocery and convenience store distribution			—				23,104				—				—				—				—				23,104
Food and beverage distribution			—				12,838				—				—				—				—				12,838
Auto sales			—				—				7,485				—				—				—				7,485
Other retail and wholesale distribution			2,199				—				11,577				—				—				—				13,776
Service			1,099				509				3,060				16,875				4,219				—				25,762
Electricity and natural gas			—				—				—				—				14,048				—				14,048
Total			47,890				36,451				22,264				16,875				18,267				—				141,747
Other revenues			2,821				78				3,287				42				755				55,566				62,549
		$	50,711			$	36,529			$	25,551			$	16,917			$	19,022			$	55,566			$	204,296

A summary of the transaction price allocated to the significant unsatisfied remaining performance obligations relating to contracts with expected durations in excess of one year as of September 30, 2022 and the timing of when the performance obligations are expected to be satisfied follows (in millions).

		Less than 12 months				Greater than 12 months				Total
Electricity and natural gas		$	3,619			$	21,586			$	25,205
Other sales and service contracts			1,588				3,039				4,627

Notes to Consolidated Financial Statements (Continued)

Note 23. Business segment data

Our operating businesses include a large and diverse group of insurance, manufacturing, service and retailing businesses. We organize our reportable business segments in a manner that reflects how management views those business activities. Certain businesses are grouped together for segment reporting based upon similar products or product lines and marketing, selling and distribution characteristics, even though those business units are operated under separate local management. Revenues and earnings before income taxes by segment for the third quarter and first nine months of 2022 and 2021 were as follows (in millions).

	Third Quarter								First Nine Months
	2022				2021				2022				2021
Revenues of Operating Businesses
Insurance:
Underwriting:
GEICO	$	9,808			$	9,604			$	29,169			$	28,073
Berkshire Hathaway Primary Group		3,485				2,964				9,916				8,373
Berkshire Hathaway Reinsurance Group		5,517				5,159				15,304				14,868
Investment income		1,683				1,339				5,331				4,212
Total insurance		20,493				19,066				59,720				55,526
BNSF		6,693				5,790				19,301				17,000
BHE		7,531				7,013				20,032				19,022
Manufacturing		19,000				17,496				57,193				50,821
McLane		13,569				12,612				39,346				36,529
Service and retailing		9,567				8,679				28,299				25,614
		76,853				70,656				223,891				204,512
Reconciliation of segments to consolidated amount
Corporate, eliminations and other		81				(73	)			33				(216	)
	$	76,934			$	70,583			$	223,924			$	204,296

	Third Quarter								First Nine Months
	2022				2021				2022				2021
Earnings (Loss) Before Income Taxes of Operating Businesses
Insurance:
Underwriting:
GEICO	$	(759	)		$	(289	)		$	(1,424	)		$	1,360
Berkshire Hathaway Primary Group		(281	)			(23	)			53				349
Berkshire Hathaway Reinsurance Group		(110	)			(708	)			1,013				(1,298	)
Investment income		1,678				1,337				5,322				4,205
Total insurance		528				317				4,964				4,616
BNSF		1,884				2,029				5,844				5,667
BHE		1,321				1,375				2,561				2,797
Manufacturing		2,883				2,445				8,735				7,595
McLane		112				(8	)			270				179
Service and retailing		1,202				1,110				3,536				3,234
		7,930				7,268				25,910				24,088
Reconciliation of segments to consolidated amount
Investment and derivative gains (losses)		(13,465	)			4,921				(82,362	)			38,015
Interest expense, not allocated to segments		(99	)			(128	)			(303	)			(386	)
Equity method investments		441				377				1,048				775
Corporate, eliminations and other		1,076				46				2,920				241
	$	(4,117	)		$	12,484			$	(52,787	)		$	62,733

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Net earnings/loss attributable to Berkshire Hathaway shareholders are disaggregated in the table that follows. Amounts are after deducting income taxes and exclude earnings attributable to noncontrolling interests (in millions).

	Third Quarter								First Nine Months
	2022				2021				2022				2021
Insurance – underwriting	$	(962	)		$	(784	)		$	(334	)		$	356
Insurance – investment income		1,408				1,161				4,484				3,588
Railroad		1,442				1,538				4,477				4,305
Utilities and energy		1,585				1,496				3,101				2,939
Manufacturing, service and retailing		3,247				2,706				9,521				8,329
Investment and derivative contract gains (losses)		(10,449	)			3,878				(65,067	)			29,979
Other		1,041				349				2,835				653
Net earnings (loss) attributable to Berkshire Hathaway shareholders	$	(2,688	)		$	10,344			$	(40,983	)		$	50,149

Through our subsidiaries, we engage in numerous diverse business activities. We manage our operating businesses on an unusually decentralized basis. There are few centralized or integrated business functions. Our senior corporate management team participates in and is ultimately responsible for significant capital allocation decisions, investment activities and the selection of the Chief Executive to head each of the operating businesses. The business segment data (Note 23 to the accompanying Consolidated Financial Statements) should be read in conjunction with this discussion.

In varying degrees, the COVID-19 pandemic has affected our operating businesses. In addition, significant disruptions of supply chains and higher costs emerged in 2021 and have persisted in 2022. Further, geopolitical conflicts, including the Russia-Ukraine conflict, have developed in 2022. We cannot reliably predict future economic effects of these events on our businesses or when our operations will normalize. Nor can we reliably predict how these events will alter the future consumption patterns of consumers and businesses we serve.

Insurance underwriting after-tax earnings decreased $178 million in the third quarter and $690 million in the first nine months of 2022 versus 2021. After-tax incurred losses attributable to significant catastrophe occurrences in the third quarter were approximately $2.7 billion from Hurricane Ian in 2022 and $1.7 billion from Hurricane Ida and floods in Europe in 2021. Underwriting results in 2022 were also negatively impacted by increases in private passenger automobile claims frequencies and severities, and favorably impacted by higher foreign currency exchange rate gains arising from the remeasurement of non-U.S. Dollar denominated liabilities of our U.S. insurance subsidiaries and improved life and health reinsurance results. After-tax earnings from insurance investment income increased $247 million in the third quarter and $896 million in the first nine months of 2022 compared to 2021, attributable to increased dividend income and higher interest rates.

After-tax earnings of our railroad, BNSF, declined 6.2% in the third quarter and increased 4.0% in the first nine months of 2022 compared to 2021. The comparative changes in earnings in 2022 reflected higher revenue per car/unit, lower overall freight volumes and higher fuel and other operating costs. After-tax earnings of our utilities and energy business increased 5.9% in the third quarter and 5.5% in the first nine months of 2022 compared to 2021. The increases reflected higher earnings from tax equity investments and from the natural gas pipeline and Northern Powergrid businesses, partly offset by lower earnings from the U.S. regulated utilities and real estate brokerage businesses. After-tax earnings from our manufacturing, service and retailing businesses increased 20.0% in the third quarter and 14.3% in the first nine months of 2022 versus 2021. Results were mixed among our various businesses. While customer demand for products and services was relatively good in 2022, demand began to weaken in the third quarter at certain of our businesses. We continue to experience the negative effects of higher materials, freight, labor and other input costs.

Investment and derivative contract gains and losses in 2022 and 2021 predominantly derived from our investments in equity securities and includes unrealized gains and losses from market price changes during the period. We believe that investment and derivative gains/losses, whether realized from dispositions or unrealized from changes in market prices of equity securities, are generally meaningless in understanding our reported quarterly or annual results or in evaluating the economic performance of our businesses. These gains and losses have caused and will continue to cause significant volatility in our periodic earnings. Other earnings included after-tax foreign currency exchange gains related to non-U.S. Dollar denominated debt of $858 million in the third quarter and $2.4 billion in the first nine months of 2022, compared to $196 million and $676 million in the third quarter and first nine months of 2021, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Insurance—Underwriting

Our management views our insurance businesses as possessing two distinct activities – underwriting and investing. Underwriting decisions are the responsibility of the unit managers, while investing decisions are the responsibility of Berkshire’s Chairman and CEO, Warren E. Buffett, and Berkshire’s corporate investment managers. Accordingly, we evaluate performance of underwriting operations without any allocation of investment income or investment gains and losses. We consider investment income as an integral component of our aggregate insurance operating results. However, we consider investment gains and losses, whether realized or unrealized, as non-operating. We believe that such gains and losses are not meaningful in understanding the quarterly or annual operating results of our insurance businesses.

The timing and magnitude of catastrophe losses can produce significant volatility in our periodic underwriting results, particularly with respect to our reinsurance businesses. Generally, we consider incurred losses exceeding $100 million from a current year catastrophic event to be significant. Significant catastrophe events in 2022 included Hurricane Ian in the third quarter and floods in Australia and South Africa during the first six months, while significant events in 2021 included Hurricane Ida and floods in Europe in the third quarter and Winter Storm Uri in the first quarter. We recorded estimated pre-tax losses of $3.4 billion from Hurricane Ian in the third quarter of 2022 and $2.2 billion from Hurricane Ida and European floods in the third quarter of 2021.

Changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years, can also significantly affect our periodic underwriting results. Unpaid loss estimates, including estimates under retroactive reinsurance contracts, were approximately $128 billion as of September 30, 2022. Our periodic underwriting results may also include significant foreign currency transaction gains and losses arising from the changes in the valuation of non-U.S. Dollar denominated liabilities of our U.S. based insurance subsidiaries from foreign currency exchange rate changes.

Underwriting results of certain of our commercial insurance and reinsurance businesses have been affected by estimated losses and costs associated with the COVID-19 pandemic. While pandemic-related losses in the first nine months of 2022 were insignificant, results in future periods may be affected by legal and regulatory actions pertaining to insurance coverage, which we cannot reasonably estimate at this time.

We provide primary insurance and reinsurance products covering property and casualty risks, as well as life and health risks. On October 19, 2022, Berkshire acquired Alleghany Corporation ("Alleghany"), which operates property and casualty insurance and reinsurance businesses. These businesses will be incorporated into our reinsurance and primary insurance results beginning as of the acquisition date. Our insurance and reinsurance businesses are GEICO, Berkshire Hathaway Primary Group and Berkshire Hathaway Reinsurance Group. Underwriting results of our insurance businesses are summarized below (dollars in millions).

	Third Quarter								First Nine Months
	2022				2021				2022				2021
Pre-tax underwriting earnings (loss):
GEICO	$	(759	)		$	(289	)		$	(1,424	)		$	1,360
Berkshire Hathaway Primary Group		(281	)			(23	)			53				349
Berkshire Hathaway Reinsurance Group		(110	)			(708	)			1,013				(1,298	)
Pre-tax underwriting earnings		(1,150	)			(1,020	)			(358	)			411
Income taxes and noncontrolling interests		(188	)			(236	)			(24	)			55
Net underwriting earnings (loss)	$	(962	)		$	(784	)		$	(334	)		$	356
Effective income tax rate		16.3	%			23.0	%			6.6	%			13.6	%

GEICO

GEICO writes private passenger automobile insurance, offering coverages to insureds in all 50 states and the District of Columbia. GEICO markets its policies mainly by direct response methods where most customers apply for coverage directly to the company via the Internet or over the telephone. A summary of GEICO’s underwriting results follows (dollars in millions).

	Third Quarter																First Nine Months
	2022								2021								2022								2021
	Amount				%				Amount				%				Amount				%				Amount				%
Premiums written	$	10,137							$	10,097							$	29,818							$	29,333
Premiums earned	$	9,808				100.0			$	9,604				100.0			$	29,169				100.0			$	28,073				100.0
Losses and loss adjustment expenses		9,515				97.0				8,486				88.4				27,164				93.1				22,566				80.4
Underwriting expenses		1,052				10.7				1,407				14.6				3,429				11.8				4,147				14.8
Total losses and expenses		10,567				107.7				9,893				103.0				30,593				104.9				26,713				95.2
Pre-tax underwriting earnings (loss)	$	(759	)						$	(289	)						$	(1,424	)						$	1,360

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Insurance—Underwriting (Continued)

GEICO (Continued)

GEICO’s pre-tax underwriting losses in 2022 reflected increased claims severities, primarily due to significant cost inflation in property and physical damage claims, which began to accelerate in the second half of 2021 and have continued through 2022. Increases in used car prices are producing increased claims severities on total losses and shortages of car parts are contributing to elevated claims severities on partial losses. In addition, injury claims severities continue to trend higher.

Premiums written were relatively unchanged in the third quarter and the first nine months of 2022 compared to 2021, reflecting increases in average premiums per auto policy due to rate increases, which were substantially offset by a decrease in policies-in-force. Voluntary auto policies-in-force declined 4.6% over the first nine months of 2022 while average premiums per voluntary auto policy increased by approximately 5.4%. Premiums earned increased $204 million (2.1%) in the third quarter and $1.1 billion (3.9%) in the first nine months of 2022 compared to 2021. Premiums earned in the first nine months of 2021 included a reduction of approximately $475 million attributable to the remaining impact of the GEICO Giveback program that provided a 15% premium credit to new and renewing voluntary auto and motorcycle policies written between April 8, 2020 and October 7, 2020.

Losses and loss adjustment expenses increased $1.0 billion (12.1%) in the third quarter and $4.6 billion (20.4%) in the first nine months of 2022 compared to 2021. GEICO’s ratio of losses and loss adjustment expenses to premiums earned was 97.0% in the third quarter and 93.1% in the first nine months of 2022, increases of 8.6 percentage points and 12.7 percentage points, respectively, compared to the same periods in 2021. The increases were primarily attributable to higher claims frequencies and severities, as well as lower reductions of loss estimates for prior years’ loss events and an increase in significant catastrophe losses.

Claims frequencies in the first nine months of 2022 were higher for all coverages, including property damage (one to two percent range), bodily injury and personal injury (four to five percent range) and collision (six to seven percent range). Average claims severities in the first nine months of 2022 were higher for property damage and collision coverages (seventeen to nineteen percent range) and bodily injury coverage (nine to eleven percent range). Losses and loss adjustment expenses reflected reductions in the ultimate loss estimates for prior years’ loss events of $386 million in the first nine months of 2022 compared to $1.2 billion in 2021. The reductions in 2022 reflected decreases in all major coverages except collision and property damage coverages, while the reductions in 2021 were across all major coverages. Losses and loss adjustment expenses in the third quarter were approximately $600 million from Hurricane Ian in 2022 and $400 million from Hurricane Ida in 2021.

Underwriting expenses decreased $355 million (25.2%) in the third quarter and $718 million (17.3%) in the first nine months of 2022 compared to 2021, primarily due to significant reductions in advertising costs in both periods and lower employee-related costs in the first nine months. GEICO’s expense ratio (underwriting expense to premiums earned) was 10.7% in the third quarter and 11.8% in the first nine months of 2022, decreases of 3.9 percentage points and 3.0 percentage points, respectively, compared to the same periods in 2021, attributable to both the decreases in expenses as well as the increases in earned premiums.

Berkshire Hathaway Primary Group

The Berkshire Hathaway Primary Group (“BH Primary”) provides a variety of commercial insurance solutions, including healthcare professional liability, workers’ compensation, automobile, general liability, property and specialty coverages for small, medium and large clients. BH Primary’s larger insurers include Berkshire Hathaway Specialty Insurance (“BH Specialty”), Berkshire Hathaway Homestate Companies (“BHHC”), MedPro Group, Berkshire Hathaway GUARD Insurance Companies (“GUARD”), National Indemnity Company (“NICO Primary”) and U.S. Liability Insurance Company (“USLI”). A summary of BH Primary underwriting results follows (dollars in millions).

	Third Quarter																First Nine Months
	2022								2021								2022								2021
	Amount				%				Amount				%				Amount				%				Amount				%
Premiums written	$	3,895							$	3,506							$	10,791							$	9,357
Premiums earned	$	3,485				100.0			$	2,964				100.0			$	9,916				100.0			$	8,373				100.0
Losses and loss adjustment expenses		2,825				81.1				2,240				75.6				7,342				74.0				6,044				72.2
Underwriting expenses		941				27.0				747				25.2				2,521				25.5				1,980				23.6
Total losses and expenses		3,766				108.1				2,987				100.8				9,863				99.5				8,024				95.8
Pre-tax underwriting earnings (loss)	$	(281	)						$	(23	)						$	53							$	349

Premiums written increased $389 million (11.1%) in the third quarter and $1.4 billion (15.3%) in the first nine months of 2022 compared to 2021, reflecting year-to-date increases at BH Specialty (20%), USLI (17%) and BHHC (15%). The increases were across a variety of property and casualty coverages and across several markets.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Insurance—Underwriting (Continued)

Berkshire Hathaway Primary Group (Continued)

BH Primary’s loss ratio was 81.1% in the third quarter and 74.0% in the first nine months of 2022, an increase of 5.5 percentage points in the third quarter and 1.8 percentage points in the first nine months compared to 2021. Losses from catastrophe events in 2022 were approximately $660 million in the third quarter (Hurricane Ian) and $740 million in the first nine months. Losses from catastrophe events in 2021 were approximately $260 million in the third quarter (largely Hurricane Ida) and $420 million in the first nine months. Losses and loss adjustment expenses also included net reductions in estimated ultimate liabilities for prior years’ loss events in the first nine months of $348 million in 2022 and $420 million in 2021. BH Primary insurers write significant levels of workers’ compensation, commercial and professional liability insurance and the related claim costs may be subject to high severity and long claim-tails. Claims liabilities could be greater than anticipated due to a variety of factors.

Underwriting expenses increased $194 million (26.0%) in the third quarter and $541 million (27.3%) in the first nine months of 2022 compared to the same periods in 2021. The expense ratio increased 1.8 percentage points in the third quarter and 1.9 percentage points in the first nine months of 2022 compared to 2021. These increases reflected costs associated with new business development programs and changes in business mix.

Berkshire Hathaway Reinsurance Group

The Berkshire Hathaway Reinsurance Group (“BHRG”) offers excess-of-loss and quota-share reinsurance coverages on property and casualty risks to insurers and reinsurers worldwide through several subsidiaries, led by National Indemnity Company (“NICO”), General Reinsurance Corporation and General Reinsurance AG. We also write life and health reinsurance coverages through General Re Life Corporation, General Reinsurance AG and Berkshire Hathaway Life Insurance Company of Nebraska (“BHLN”). We periodically assume property and casualty risks under retroactive reinsurance contracts written through NICO. In addition, we write periodic payment annuity contracts through BHLN.

Generally, we strive to generate underwriting profits. However, time-value-of-money concepts are important elements in establishing prices for retroactive reinsurance and periodic payment annuity business due to the expected long durations of the claim liabilities. We expect to incur pre-tax underwriting losses from such business, primarily through deferred charge amortization and discount accretion charges. We receive premiums at the inception of these contracts, which are then available for investment. A summary of BHRG’s premiums and pre-tax underwriting results follows (in millions).

	Third Quarter																First Nine Months
	Premiums earned								Pre-tax underwriting earnings (loss)								Premiums earned								Pre-tax underwriting earnings (loss)
	2022				2021				2022				2021				2022				2021				2022				2021
Property/casualty	$	4,013			$	3,637			$	23			$	(247	)		$	10,943			$	10,385			$	1,404			$	121
Life/health		1,309				1,328				67				(181	)			3,822				3,932				130				(522	)
Retroactive reinsurance		—				—				(83	)			(158	)			—				82				(325	)			(620	)
Periodic payment annuity		192				191				(149	)			(94	)			529				458				(279	)			(374	)
Variable annuity		3				3				32				(28	)			10				11				83				97
	$	5,517			$	5,159			$	(110	)		$	(708	)		$	15,304			$	14,868			$	1,013			$	(1,298	)

Property/casualty

A summary of property/casualty reinsurance underwriting results follows (dollars in millions).

	Third Quarter																First Nine Months
	2022								2021								2022								2021
	Amount				%				Amount				%				Amount				%				Amount				%
Premiums written	$	4,574							$	4,115							$	13,119							$	11,924
Premiums earned	$	4,013				100.0			$	3,637				100.0			$	10,943				100.0			$	10,385				100.0
Losses and loss adjustment expenses		3,451				86.0				2,986				82.1				7,825				71.5				7,689				74.0
Underwriting expenses		539				13.4				898				24.7				1,714				15.7				2,575				24.8
Total losses and expenses		3,990				99.4				3,884				106.8				9,539				87.2				10,264				98.8
Pre-tax underwriting earnings (loss)	$	23							$	(247	)						$	1,404							$	121

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Insurance—Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

Property/casualty (Continued)

Premiums written increased $459 million (11.2%) in the third quarter and $1.2 billion (10.0%) in the first nine months of 2022 compared to the same periods in 2021, primarily due to net increases in new property business and higher rates, partially offset by unfavorable foreign currency translation effects. Losses and loss adjustment expenses increased $465 million (15.6%) in the third quarter and $136 million (1.8%) in the first nine months of 2022 compared to 2021. Losses incurred from catastrophe events were $1.9 billion in the third quarter (primarily Hurricane Ian) and $2.6 billion in the first nine months of 2022 and were $1.5 billion in the third quarter and $1.9 billion in the first nine months of 2021. Reductions in estimated ultimate liabilities for losses occurring in prior years were $833 million in the third quarter and $1.4 billion in the first nine months of 2022 and were $599 million in the third quarter and $564 million in the first nine months of 2021.

Underwriting expenses as percentages of premiums earned decreased 11.3 percentage points in the third quarter and 9.1 percentage points in the first nine months of 2022 compared to 2021, primarily attributable to foreign currency exchange rate effects and changes in business mix. Underwriting expenses included foreign currency exchange gains of $315 million in the third quarter and $704 million in the first nine months of 2022, primarily related to a third quarter 2021 intercompany reinsurance agreement in which a non-U.S. based Berkshire subsidiary ceded non-U.S. Dollar denominated liabilities to a U.S. based Berkshire subsidiary. The foreign currency exchange gains in the third quarter of 2021 were not significant. Under U.S. GAAP, the effects of exchange rate changes from the remeasurement of liabilities assumed by the U.S. subsidiary are reflected in earnings as its functional currency is the U.S. Dollar. The net foreign currency exchange rate effects from translating the financial statements of the non-U.S. subsidiary to the U.S. Dollar are included in other comprehensive income.

Life/health

A summary of our life/health reinsurance underwriting results follows (dollars in millions).

	Third Quarter																First Nine Months
	2022								2021								2022								2021
	Amount				%				Amount				%				Amount				%				Amount				%
Premiums written	$	1,251							$	1,332							$	3,743							$	3,929
Premiums earned	$	1,309				100.0			$	1,328				100.0			$	3,822				100.0			$	3,932				100.0
Life and health insurance benefits		1,013				77.4				1,247				93.9				3,028				79.2				3,733				94.9
Underwriting expenses		229				17.5				262				19.7				664				17.4				721				18.4
Total benefits and expenses		1,242				94.9				1,509				113.6				3,692				96.6				4,454				113.3
Pre-tax underwriting earnings (loss)	$	67							$	(181	)						$	130							$	(522	)

Life/health premiums written decreased $81 million (6.1%) in the third quarter and $186 million (4.7%) in the first nine months of 2022 compared to the same periods in 2021, primarily due to unfavorable foreign currency translation effects. Life and health benefits declined $234 million (18.8%) in the third quarter and $705 million (18.9%) in the first nine months of 2022 compared to 2021, primarily due to relatively high pandemic-related mortality claims in the U.S., South Africa, India and Latin America in 2021.

Retroactive reinsurance

Pre-tax underwriting losses in each period derived from the amortization of deferred charges and changes in the estimated timing and amounts of future claim payments. Underwriting results also include foreign currency exchange gains and losses from the effects of changes in foreign currency exchange rates on non-U.S. Dollar denominated liabilities of our U.S. subsidiaries. Foreign currency exchange gains were $130 million in the third quarter and $287 million in the first nine months of 2022 compared to $70 million in the first nine months of 2021, substantially all of which was in the third quarter. Pre-tax underwriting losses before foreign currency exchange effects were $213 million in the third quarter and $612 million in the first nine months of 2022 compared to $227 million in the third quarter and $690 million in the first nine months of 2021.

Unpaid losses assumed under retroactive reinsurance contracts declined $1.6 billion in the first nine months of 2022 to $36.7 billion at September 30, 2022, primarily due to loss payments. Unamortized deferred charges related to retroactive reinsurance contracts declined $649 million in the first nine months of 2022 to $10.0 billion at September 30, 2022, primarily attributable to periodic amortization. Deferred charge amortization will be included in underwriting earnings over the expected remaining claims settlement periods.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Insurance—Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

Periodic payment annuity

Periodic payment annuity premiums earned were relatively unchanged in the third quarter and increased 15.5% in the first nine months of 2022 compared to the same periods in 2021. Periodic payment annuity business is both price and demand sensitive and the supply of available business is affected by the timing of underlying legal claim settlements. Our volumes written may change rapidly due to changes in prices, which are affected by prevailing interest rates, the perceived risks and durations associated with the expected annuity payments, as well as the level of competition.

Our periodic payment annuity contracts normally produce pre-tax underwriting losses, deriving from the recurring accretion of time-value discounted annuity liabilities, which includes discount accrual on liabilities of contracts without life contingencies. Underwriting results also include gains or losses from foreign currency exchange rate changes on non-U.S. Dollar denominated liabilities of our U.S. subsidiaries. Pre-tax underwriting results included foreign currency gains of $119 million in the third quarter and $279 million in the first nine months of 2022 compared to $45 million in the third quarter and $25 million in the first nine months of 2021.

Pre-tax underwriting losses before foreign currency exchange effects were $268 million in the third quarter and $558 million in the first nine months of 2022 and $139 million in the third quarter and $399 million in the first nine months of 2021. Pre-tax losses in the third quarter of 2022 included approximately $130 million attributable to an agreement to terminate an existing reinsurance contract, in which the settlement payable exceeded the carrying value of the liabilities. Discounted annuity liabilities were $15.2 billion at September 30, 2022, which included $3.9 billion for contracts without life contingencies, and had a weighted average discount rate of approximately 3.9%. Upon the adoption of ASU 2018-12 in 2023, the discount rates will be adjusted quarterly based upon prevailing interest rates which could have a significant effect on our recorded annuity liabilities. The periodic effect from discount rate changes will be largely reflected in other comprehensive income.

Variable annuity

Variable annuity guarantee reinsurance contracts produced pre-tax gains of $32 million in the third quarter and $83 million in the first nine months of 2022 compared to pre-tax losses of $28 million in the third quarter and gains of $97 million in the first nine months of 2021. The results from these contracts are affected by changes in securities markets, interest rates and foreign currency exchange rates, which can be volatile, and from the periodic amortization of expected profit margins. Underwriting earnings in the first nine months of 2022 and 2021 were primarily attributable to the net effects of interest rate increases and changes in securities markets which were unfavorable in 2022 and favorable in 2021. Underwriting results in the third quarter of 2021 included losses from lower underlying lapse rate assumptions.

Insurance—Investment Income

A summary of net investment income attributable to our insurance operations follows (dollars in millions).

	Third Quarter								First Nine Months								Percentage Change
	2022				2021				2022				2021				Third Quarter				First Nine Months
Dividend income	$	1,281			$	1,196			$	4,533			$	3,747				7.1	%			21.0	%
Interest and other investment income		397				141				789				458				181.6				72.3
Pre-tax net investment income		1,678				1,337				5,322				4,205				25.5				26.6
Income taxes and noncontrolling interests		270				176				838				617
Net investment income	$	1,408			$	1,161			$	4,484			$	3,588
Effective income tax rate		16.1	%			13.1	%			15.7	%			14.7	%

Dividend income increased 7.1% in the third quarter and 21.0% in the first nine months of 2022 compared to 2021. The increases in 2022 reflected an overall increase in equity security investments during 2022. Dividend income also varies from period to period due to changes in the investment portfolio and the frequency and timing of dividends from certain investees. Dividend income included $8 million in the third quarter and $37 million in the first nine months of 2022 and $26 million in the third quarter and $101 million in the first nine months of 2021 from investments in preferred stock of Berkshire Hathaway Energy. Such amounts are deducted from earnings of the utilities and energy segment.

Interest and other investment income increased $256 million (181.6%) in the third quarter and $331 million (72.3%) in the first nine months of 2022 compared to the same periods in 2021. The increases were primarily due to increases in short-term interest rates. We continue to hold substantial balances of cash, cash equivalents and short-term U.S. Treasury Bills. While exceptionally low interest rates prevailed in recent years, interest rates increased significantly over the first nine months of 2022. We continue to believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to short-term investments.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Insurance—Investment Income (Continued)

Invested assets of our insurance businesses derive from shareholder capital and from net liabilities under insurance and reinsurance contracts or “float.” The major components of float are unpaid losses and loss adjustment expenses, including liabilities under retroactive reinsurance contracts, life, annuity and health benefit liabilities, unearned premiums and other liabilities due to policyholders, which are reduced by insurance premiums receivable, reinsurance receivables, deferred charges assumed under retroactive reinsurance contracts and deferred policy acquisition costs. Float approximated $150 billion at September 30, 2022 and $147 billion at December 31, 2021. Our combined insurance operations generated pre-tax underwriting losses of $358 million in the first nine months of 2022 and, consequently, the average cost of float for that period was 0.24%. In October 2022, Berkshire acquired Alleghany, which operates insurance and reinsurance businesses. Estimated float of Alleghany’s businesses approximated $13.5 billion based on its historical balance sheet at September 30, 2022. A summary of cash and investments held in our insurance businesses as of September 30, 2022 and December 31, 2021 follows (in millions).

		September 30, 2022				December 31, 2021
Cash, cash equivalents and U.S. Treasury Bills		$	59,699			$	90,688
Equity securities			295,387				334,907
Fixed maturity securities			18,476				16,386
Other			3,252				4,296
		$	376,814			$	446,277

Fixed maturity securities as of September 30, 2022 were as follows (in millions).

		Amortized Cost				Unrealized Gains (Losses)				Carrying Value
U.S. Treasury, U.S. government corporations and agencies		$	9,023			$	(264	)		$	8,759
Foreign governments			8,630				(196	)			8,434
Corporate bonds			821				200				1,021
Other			244				18				262
		$	18,718			$	(242	)		$	18,476

U.S. government obligations are rated AA+ or Aaa by the major rating agencies. Approximately 93% of all foreign government obligations were rated AA or higher by at least one of the major rating agencies as of September 30, 2022. Foreign government securities include obligations issued or unconditionally guaranteed by national or provincial government entities.

Railroad

Burlington Northern Santa Fe, LLC (“BNSF”) operates one of the largest railroad systems in North America, with over 32,500 route miles of track in 28 states. BNSF also operates in three Canadian provinces. BNSF classifies its major business groups by type of product shipped including consumer products, industrial products, agricultural products and coal. A summary of BNSF’s earnings follows (dollars in millions).

		Third Quarter								First Nine Months
		2022				2021				2022				2021
Railroad operating revenues		$	6,530			$	5,591			$	18,761			$	16,421
Railroad operating expenses:
Compensation and benefits			1,479				1,168				3,916				3,477
Fuel			1,272				705				3,409				1,948
Purchased services			530				510				1,538				1,525
Depreciation and amortization			633				608				1,875				1,832
Equipment rents, materials and other			508				338				1,494				1,262
Total			4,422				3,329				12,232				10,044
Railroad operating earnings			2,108				2,262				6,529				6,377
Other revenues (expenses):
Other revenues			163				199				540				579
Other expenses, net			(129	)			(176	)			(458	)			(514	)
Interest expense			(258	)			(256	)			(767	)			(775	)
Pre-tax earnings			1,884				2,029				5,844				5,667
Income taxes			442				491				1,367				1,362
Net earnings		$	1,442			$	1,538			$	4,477			$	4,305
Effective income tax rate			23.5	%			24.2	%			23.4	%			24.0	%