Berkshire Hathaway 10-Q 2023-09-30

BRK-B · CIK 1067983 · Form 10-Q · Period ended September 30, 2023 · Filed November 6, 2023

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Cover and table of contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-14905

BERKSHIRE HATHAWAY INC**.**

(Exact name of registrant as specified in its charter)


Delaware	47-0813844
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

3555 Farnam Street**,** Omaha**,** Nebraska 68131

(Address of principal executive office) (Zip Code)

(402) 346-1400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Class A Common Stock Class B Common Stock 1.300% Senior Notes due 2024 0.000% Senior Notes due 2025 1.125% Senior Notes due 2027 2.150% Senior Notes due 2028 1.500% Senior Notes due 2030 2.000% Senior Notes due 2034 1.625% Senior Notes due 2035 2.375% Senior Notes due 2039 0.500% Senior Notes due 2041 2.625% Senior Notes due 2059	BRK.A BRK.B BRK24 BRK25 BRK27 BRK28 BRK30 BRK34 BRK35 BRK39 BRK41 BRK59	New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Number of shares of common stock outstanding as of October 24, 2023:


Class A —	571,726
Class B —	1,308,414,093

BERKSHIRE HATHAWAY INC.


		Page No.

Part I – Financial Information

Item 1. Financial Statements
	Consolidated Balance Sheets—September 30, 2023 and December 31, 2022	2
	Consolidated Statements of Earnings—Third Quarter and First Nine Months 2023 and 2022	4
	Consolidated Statements of Comprehensive Income—Third Quarter and First Nine Months 2023 and 2022	5
	Consolidated Statements of Changes in Shareholders’ Equity—Third Quarter and First Nine Months 2023 and 2022	6
	Consolidated Statements of Cash Flows—First Nine Months 2023 and 2022	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51

Part II – Other Information		51

Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53

Signature		53

Part I Financia****l Information

Item 1. Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED BA****LANCE SHEETS

(dollars in millions)


	September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Insurance and Other:
Cash and cash equivalents*	$	25,573	$	32,260
Short-term investments in U.S. Treasury Bills		126,401		92,774
Investments in fixed maturity securities		22,435		25,128
Investments in equity securities		318,621		308,793
Equity method investments		27,496		28,050
Loans and finance receivables		24,009		23,208
Other receivables		45,878		43,490
Inventories		24,755		25,366
Property, plant and equipment		21,758		21,113
Equipment held for lease		16,284		15,584
Goodwill		50,939		51,522
Other intangible assets		29,495		29,187
Deferred charges - retroactive reinsurance		9,265		9,870
Other		19,674		19,657
		762,583		726,002
Railroad, Utilities and Energy:
Cash and cash equivalents*		5,267		3,551
Receivables		6,848		4,795
Property, plant and equipment		173,456		160,268
Goodwill		34,713		26,597
Regulatory assets		5,694		5,062
Other		31,372		22,190
		257,350		222,463
	$	1,019,933	$	948,465

——————

*** *Includes U.S. Treasury Bills with maturities of three months or less when purchased of $*3.6 *billion at September 30, 2023 and $*2.6 billion at December 31, 2022.

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CON****SOLIDATED BALANCE SHEETS

(dollars in millions)


	September 30, 2023			December 31, 2022
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance and Other:
Unpaid losses and loss adjustment expenses	$	109,824		$	107,472
Unpaid losses and loss adjustment expenses - retroactive reinsurance contracts		33,919			35,415
Unearned premiums		31,914			28,657
Life, annuity and health insurance benefits		18,556			19,753
Other policyholder liabilities		11,105			11,370
Accounts payable, accruals and other liabilities		32,259			33,201
Aircraft repurchase liabilities and unearned lease revenues		7,549			6,820
Notes payable and other borrowings		40,941			46,538
		286,067			289,226
Railroad, Utilities and Energy:
Accounts payable, accruals and other liabilities		22,818			16,615
Regulatory liabilities		6,688			7,369
Notes payable and other borrowings		83,840			76,206
		113,346			100,190
Income taxes, principally deferred		85,793			77,368
Total liabilities		485,206			466,784
Redeemable noncontrolling interests		3,230			—
Shareholders’ equity:
Common stock		8			8
Capital in excess of par value		34,473			35,167
Accumulated other comprehensive income		(4,272	)		(5,052	)
Retained earnings		569,776			511,127
Treasury stock, at cost		(74,655	)		(67,826	)
Berkshire Hathaway shareholders’ equity		525,330			473,424
Noncontrolling interests		6,167			8,257
Total shareholders’ equity		531,497			481,681
	$	1,019,933		$	948,465

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
	2023			2022			2023		2022
Revenues:
Insurance and Other:
Insurance premiums earned	$	21,360		$	18,754		$	61,717	$	54,323
Sales and service revenues		39,456			39,597			116,970		117,679
Leasing revenues		2,104			1,959			6,227		5,518
Interest, dividend and other investment income		4,047			2,378			11,122		7,101
		66,967			62,688			196,036		184,621
Railroad, Utilities and Energy:
Freight rail transportation revenues		5,828			6,663			17,637		19,219
Utility and energy operating revenues		19,033			6,090			53,543		15,843
Service revenues and other income		1,382			1,463			3,890		4,265
		26,243			14,216			75,070		39,327
Total revenues		93,210			76,904			271,106		223,948

Investment and derivative contract gains (losses)		(29,778	)		(13,465	)		38,041		(82,362	)

Costs and expenses:
Insurance and Other:
Insurance losses and loss adjustment expenses		13,719			16,005			42,029		42,957
Life, annuity and health insurance benefits		1,144			1,428			3,057		3,951
Insurance underwriting expenses		3,496			2,613			10,812		7,594
Cost of sales and services		31,049			31,292			91,989		92,710
Cost of leasing		1,489			1,418			4,423		4,148
Selling, general and administrative expenses		5,120			4,068			15,727		12,081
Interest expense		311			297			953		863
		56,328			57,121			168,990		164,304
Railroad, Utilities and Energy:
Freight rail transportation expenses		4,038			4,581			12,213		12,766
Utilities and energy cost of sales and other expenses		18,249			4,295			50,254		11,730
Other expenses		1,089			1,320			3,149		4,003
Interest expense		949			795			2,774		2,350
		24,325			10,991			68,390		30,849
Total costs and expenses		80,653			68,112			237,380		195,153
Earnings (loss) before income taxes and equity method earnings		(17,221	)		(4,673	)		71,767		(53,567	)
Equity method earnings		262			415			1,461		958
Earnings (loss) before income taxes		(16,959	)		(4,258	)		73,228		(52,609	)
Income tax expense (benefit)		(4,392	)		(1,560	)		13,839		(12,374	)
Net earnings (loss)		(12,567	)		(2,698	)		59,389		(40,235	)

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

Insurance—Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

Property/casualty

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


	Third Quarter								First Nine Months
	2023				2022				2023				2022
	Amount		%		Amount		%		Amount		%		Amount		%
Premiums written	$	5,441			$	4,574			$	17,575			$	13,119
Premiums earned	$	5,739		100.0	$	4,013		100.0	$	16,213		100.0	$	10,943		100.0
Losses and loss adjustment expenses		2,918		50.8		3,451		86.0		9,098		56.1		7,825		71.5
Underwriting expenses		1,333		23.3		539		13.4		4,113		25.4		1,714		15.7
Total losses and expenses		4,251		74.1		3,990		99.4		13,211		81.5		9,539		87.2
Pre-tax underwriting earnings	$	1,488			$	23			$	3,002			$	1,404

Premiums written in the third quarter and first nine months of 2023 included $1.4 billion and $4.0 billion, respectively, written by TransRe Group. Otherwise, premiums written in the first nine months of 2023 increased $497 million (3.8%) compared to 2022. We have written considerable levels of property business in recent years and we generally do not retrocede the risks we assume. Consequently, our periodic underwriting earnings are subject to considerable volatility from significant catastrophe loss events.

Losses and loss adjustment expenses were $2.9 billion in the third quarter and $9.1 billion in the first nine months of 2023, and included $881 million and $2.4 billion, respectively, from TransRe Group. Excluding TransRe Group, losses and loss adjustment expenses decreased $1.4 billion (41.0%) in the third quarter and $1.1 billion (14.0%) in the first nine months of 2023 compared to 2022. Losses incurred from significant catastrophes in the first nine months were $552 million in 2023 and $2.5 billion in 2022, including $1.9 billion in the third quarter primarily from Hurricane Ian. Reductions in estimated ultimate liabilities for losses occurring in prior accident years were $1.5 billion in the first nine months of 2023 and $1.4 billion in the first nine months of 2022. Overall, the loss ratio decreased 15.4 percentage points in the first nine months of 2023 compared to 2022.

Underwriting expenses in 2023 increased $794 million in the third quarter and $2.4 billion in the first nine months compared to 2022. The expense ratio increased 9.9 percentage points in the third quarter and 9.7 percentage points in the first nine months of 2023 compared to 2022. The increases were primarily attributable to changes in foreign currency exchange rates related to the remeasurement of certain non-U.S. Dollar denominated liabilities of our U.S. subsidiaries and changes in business mix, including the impact of TransRe Group. Underwriting expenses included foreign currency exchange gains of $114 million in the third quarter and losses of $78 million in the first nine months of 2023 compared to gains of $315 million in the third quarter and $704 million in the first nine months of 2022. Underwriting expenses included $452 million in the third quarter and $1.2 billion in the first nine months of 2023 from TransRe Group.

Life/health

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


	Third Quarter								First Nine Months
	2023				2022				2023				2022
	Amount		%		Amount		%		Amount		%		Amount		%
Premiums written	$	1,332			$	1,251			$	3,685			$	3,743
Premiums earned	$	1,328		100.0	$	1,256		100.0	$	3,677		100.0	$	3,766		100.0
Life and health insurance benefits		1,034		77.9		1,000		79.6		2,732		74.3		2,973		78.9
Underwriting expenses		244		18.3		238		19.0		711		19.3		677		18.0
Total benefits and expenses		1,278		96.2		1,238		98.6		3,443		93.6		3,650		96.9
Pre-tax underwriting earnings	$	50			$	18			$	234			$	116

Premiums earned increased $72 million (5.7%) in the third quarter and decreased $89 million (2.4%) in the first nine months of 2023 compared to 2022. In the first quarter of 2023, several U.S. life reinsurance contracts were commuted, which reduced premiums earned by $161 million and life reinsurance benefits incurred by $304 million. Excluding these effects, premiums earned increased 1.9% in the first nine months of 2023, and life reinsurance benefits incurred increased 2.1% in the first nine months of 2023 versus 2022. The 1.3 percentage point increase in the underwriting expense ratio in the first nine months of 2023 versus 2022 was primarily attributable to the impact of the life reinsurance contract commutations and increased underwriting expenses.

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

Insurance—Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

Retroactive reinsurance

Pre-tax underwriting losses from retroactive reinsurance in each period derived from the amortization of deferred charges and the effects of 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. Pre-tax foreign currency exchange gains were $38 million in the first nine months of 2023 compared to $289 million in the first nine months of 2022. Before foreign currency exchange effects, pre-tax underwriting losses were $622 million in the first nine months of 2023 and $614 million in 2022.

Unpaid losses assumed under retroactive reinsurance contracts were $33.9 billion at September 30, 2023, a decline of $1.5 billion since December 31, 2022, primarily attributable to claim payments. Unamortized deferred charges related to retroactive reinsurance contracts were $9.3 billion at September 30, 2023, a decline of $605 million since December

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Reference is made to Berkshire’s Annual Report on Form 10-K for the year ended December 31, 2022 and in particular the “Market Risk Disclosures” included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of September 30, 2023, there were no material changes in the market risks described in Berkshire’s Annual Report.

Item 4. Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer) concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings. During the quarter, there have been no significant changes in the Company’s internal control over financial reporting or in other factors that could significantly affect internal control over financial reporting.

Part II Other Information

Item 1. Legal Proceedings

Berkshire and its subsidiaries 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.

Reference is made to Note 23 to the accompanying Consolidated Financial Statements for information concerning certain litigation involving Berkshire subsidiaries. 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 currently believe that any liability that may arise as a result of such other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.

Item 1A. Risk Factors

Our significant business risks are described in Item 1A to Form 10-K for the year ended December 31, 2022, to which reference is made herein. The risks and uncertainties we describe are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business or operations. Any adverse effect on our business, financial condition or operating results could result in a decline in the value of our securities and the loss of all or part of your investment.

Item 2. Unregistered Sales of Equity Securities and Use o****f Proceeds and Issuer Repurchases of Equity Securities

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. Repurchases may be in the open market or through privately negotiated transactions. Information with respect to Berkshire’s Class A and Class B common stock repurchased during the third quarter of 2023 follows.


Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced program		Maximum number or value of shares that yet may be repurchased under the program
July
Class A common stock		177	$	521,430.04		177	*
Class B common stock		—	$	—		—	*

August
Class A common stock		607	$	541,740.69		607	*
Class B common stock		—	$	—		—	*

September
Class A common stock		1,115	$	550,813.96		1,115	*
Class B common stock		143,675	$	357.22		143,675	*

——————

** The program does not specify a maximum number of shares to be repurchased or 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 repurchase program. Berkshire will not repurchase its common stock if the repurchases reduce the total value of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bills holdings to less than $30 billion.*

Item 3. Defaults Upo****n Senior Securities

None

Item 4. Mine Safe****ty Disclosures

Information regarding the Company’s mine safety violations and other legal matters disclosed in accordance with Section 1503(a) of the Dodd-Frank Reform Act is included in Exhibit 95 to this Form 10-Q.

Item 5. Other Information

Berkshire has never adopted a Rule 10b5-1 trading arrangement (as that term is defined in Item 408(a)(1)(i) of Regulation S-K). None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the third quarter of 2023.

Item 6. Exhibits


	a. Exhibits

3(i)	Restated Certificate of Incorporation Incorporated by reference to Exhibit 3(i) to Form 10-K filed on March 2, 2015.

3(ii)	Amended and Restated By-Laws Incorporated by reference to Exhibit 3(ii) to Form 8-K filed on May 10, 2023.

31.1	Rule 13a-14(a)/15d-14(a) Certifications

31.2	Rule 13a-14(a)/15d-14(a) Certifications

32.1	Section 1350 Certifications

32.2	Section 1350 Certifications

95	Mine Safety Disclosures

101	The following financial information from Berkshire Hathaway Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in iXBRL (Inline Extensible Business Reporting Language) includes: (i) the Cover Page (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Earnings, (iv) the Consolidated Statements of Comprehensive Income, (v) the Consolidated Statements of Changes in Shareholders’ Equity, (vi) the Consolidated Statements of Cash Flows, and (vii) the Notes to Consolidated Financial Statements, tagged in summary and detail.

104	Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)

SIGNAT****URE

Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


		BERKSHIRE HATHAWAY INC.
		(Registrant)

Date: November 4, 2023		/S/ MARC D. HAMBURG
		(Signature)
		Marc D. Hamburg,
		Senior Vice President and
		Principal Financial Officer