Berkshire Hathaway 10-Q 2024-06-30

Filed 2024-08-05. 8 sections, 237K characters. Original on sec.gov · Markdown · JSON

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 June 30, 2024


☐	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 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 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

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 July 23, 2024:


Class A —	553,234
Class B —	1,325,192,508

BERKSHIRE HATHAWAY INC.


		Page No.

Part I – Financial Information

Item 1. Financial Statements
	Consolidated Balance Sheets—June 30, 2024 and December 31, 2023	2
	Consolidated Statements of Earnings—Second Quarter and First Six Months 2024 and 2023	4
	Consolidated Statements of Comprehensive Income—Second Quarter and First Six Months 2024 and 2023	5
	Consolidated Statements of Changes in Shareholders’ Equity—Second Quarter and First Six Months 2024 and 2023	5
	Consolidated Statements of Cash Flows—First Six Months 2024 and 2023	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48

Part II – Other Information		48

Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50

Signature		50

Part I Financia****l Information

Item 1. Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED BA****LANCE SHEETS

(dollars in millions)


	June 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Insurance and Other:
Cash and cash equivalents*	$	36,884	$	33,672
Short-term investments in U.S. Treasury Bills		234,618		129,619
Investments in fixed maturity securities		16,802		23,758
Investments in equity securities		284,871		353,842
Equity method investments		30,065		29,066
Loans and finance receivables		26,085		24,681
Other receivables		45,967		44,174
Inventories		23,498		24,159
Property, plant and equipment		22,144		22,030
Equipment held for lease		17,418		16,947
Goodwill		50,800		50,868
Other intangible assets		28,788		29,327
Deferred charges - retroactive reinsurance		9,064		9,495
Other		20,629		19,568
		847,633		811,206
Railroad, Utilities and Energy:
Cash and cash equivalents*		5,440		4,350
Receivables		6,502		7,086
Property, plant and equipment		179,907		177,616
Goodwill		33,611		33,758
Regulatory assets		5,392		5,565
Other		30,375		30,397
		261,227		258,772
	$	1,108,860	$	1,069,978

——————

*** Includes U.S. Treasury Bills *with maturities of three months or less when purchased of $*4.1 *billion at June 30, 2024 and $*4.8 billion at December 31, 2023.

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CON****SOLIDATED BALANCE SHEETS

(dollars in millions)


	June 30, 2024			December 31, 2023
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance and Other:
Unpaid losses and loss adjustment expenses	$	112,804		$	111,082
Unpaid losses and loss adjustment expenses - retroactive reinsurance contracts		33,494			34,647
Unearned premiums		32,185			30,507
Life, annuity and health insurance benefits		17,500			20,213
Other policyholder liabilities		10,719			11,545
Accounts payable, accruals and other liabilities		32,403			32,402
Aircraft repurchase liabilities and unearned lease revenues		8,442			8,253
Notes payable and other borrowings		41,940			42,692
		289,487			291,341
Railroad, Utilities and Energy:
Accounts payable, accruals and other liabilities		21,194			22,461
Regulatory liabilities		7,106			6,818
Notes payable and other borrowings		81,688			85,579
		109,988			114,858
Income taxes, principally deferred		101,414			93,009
Total liabilities		500,889			499,208
Redeemable noncontrolling interests		—			3,261
Shareholders’ equity:
Common stock		8			8
Capital in excess of par value		34,991			34,480
Accumulated other comprehensive income		(3,855	)		(3,763	)
Retained earnings		650,273			607,350
Treasury stock, at cost		(79,720	)		(76,802	)
Berkshire Hathaway shareholders’ equity		601,697			561,273
Noncontrolling interests		6,274			6,236
Total shareholders’ equity		607,971			567,509
	$	1,108,860		$	1,069,978

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)


	Second Quarter				First Six Months
	2024		2023		2024		2023
Revenues:
Insurance and Other:
Insurance premiums earned	$	21,953	$	20,561	$	43,427	$	40,357
Sales and service revenues		38,892		39,126		76,364		77,514
Leasing revenues		2,308		2,079		4,530		4,123
Interest, dividend and other investment income		5,249		3,846		9,554		7,075
		68,402		65,612		133,875		129,069
Railroad, Utilities and Energy:
Freight rail transportation revenues		5,720		5,808		11,357		11,809
Utility and energy operating revenues		18,048		19,593		35,738		34,510
Service revenues and other income		1,483		1,490		2,552		2,508
		25,251		26,891		49,647		48,827
Total revenues		93,653		92,503		183,522		177,896

Investment gains (losses)		23,857		33,061		25,733		67,819

Costs and expenses:
Insurance and Other:
Insurance losses and loss adjustment expenses		14,107		14,089		27,555		28,310
Life, annuity and health benefits		954		1,128		1,899		1,913
Insurance underwriting expenses		4,046		3,729		7,799		7,316
Cost of sales and services		30,391		30,621		59,786		60,940
Cost of leasing		1,739		1,457		3,430		2,934
Selling, general and administrative expenses		5,195		5,005		9,968		10,607
Interest expense		330		314		646		642
		56,762		56,343		111,083		112,662
Railroad, Utilities and Energy:
Freight rail transportation expenses		3,912		4,014		7,850		8,175
Utility and energy cost of sales and other expenses		16,819		18,159		33,087		32,005
Other expenses		1,232		1,189		2,237		2,060
Interest expense		900		935		1,900		1,825
		22,863		24,297		45,074		44,065
Total costs and expenses		79,625		80,640		156,157		156,727
Earnings before income taxes and equity method earnings		37,885		44,924		53,098		88,988
Equity method earnings		252		511		745		1,199
Earnings before income taxes		38,137		45,435		53,843		90,187
Income tax expense		7,639		9,236		10,513		18,231
Net earnings		30,498		36,199		43,330		71,956
Earnings attributable to noncontrolling interests		150		287		280		540
**

Showing the first 8K of 145K characters. Open the full section

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

Insurance—Underwriting

Berkshire Hathaway Reinsurance Group

Property/casualty

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


	Second Quarter								First Six Months
	2024				2023				2024				2023
	Amount		%		Amount		%		Amount		%		Amount		%
Premiums written	$	5,547			$	5,866			$	12,002			$	12,134
Premiums earned	$	5,608		100.0	$	5,325		100.0	$	11,043		100.0	$	10,474		100.0
Losses and loss adjustment expenses		3,124		55.7		2,793		52.5		6,117		55.4		6,180		59.0
Underwriting expenses		1,462		26.1		1,408		26.4		2,896		26.2		2,780		26.5
Total losses and expenses		4,586		81.8		4,201		78.9		9,013		81.6		8,960		85.5
Pre-tax underwriting earnings	$	1,022			$	1,124			$	2,030			$	1,514

Premiums written declined 5.4% in the second quarter and 1.1% in the first six months of 2024 compared to 2023, primarily due to reductions of property volumes. We generally do not retrocede the risks we assume. Our periodic underwriting earnings may be subject to considerable volatility from the timing and magnitude of significant catastrophe loss events. Premiums earned increased 5.3% in the second quarter and 5.4% in the first six months of 2024 compared to 2023.

Losses and loss adjustment expenses increased $331 million (11.9%) in the second quarter and decreased $63 million (1.0%) in the first six months of 2024 versus 2023. The loss ratio increased 3.2 percentage points in the second quarter and declined 3.6 percentage points in the first six months of 2024 compared to 2023. We experienced no significant catastrophe loss events in the first six months of 2024. Catastrophe losses were approximately $130 million in the second quarter and $530 million in the first six months of 2023. Reductions in liabilities for losses and loss adjustment expenses attributable to prior accident years were $734 million in the first six months of 2024 compared to $883 million in 2023.

Underwriting expenses increased $54 million (3.8%) in the second quarter and $116 million (4.2%) in the first six months of 2024 compared to 2023. Underwriting expenses included pre-tax foreign currency exchange gains from the remeasurement of certain non-U.S. Dollar denominated liabilities of $25 million in the second quarter and $51 million in the first six months of 2024 compared to losses of $118 million in the second quarter and $192 million in the first six months of 2023. Before the foreign currency exchange gains and losses, underwriting expenses increased $197 million in the second quarter and $359 million in the first six months of 2024 compared to 2023, primarily due to the increases in premiums earned and changes in property business mix.

Life/health

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


	Second Quarter								First Six Months
	2024				2023				2024				2023
	Amount		%		Amount		%		Amount		%		Amount		%
Premiums written	$	1,226			$	1,292			$	2,457			$	2,353
Premiums earned	$	1,220		100.0	$	1,289		100.0	$	2,449		100.0	$	2,349		100.0
Life and health benefits		842		69.0		1,020		79.1		1,675		68.4		1,698		72.3
Underwriting expenses		305		25.0		222		17.3		593		24.2		467		19.9
Total benefits and expenses		1,147		94.0		1,242		96.4		2,268		92.6		2,165		92.2
Pre-tax underwriting earnings	$	73			$	47			$	181			$	184

Premiums earned declined $69 million (5.4%) in the second quarter and increased $100 million (4.3%) in the first six months of 2024 compared to 2023. The year-to-date increase was primarily due to the commutation of several U.S. life contracts in the first quarter of 2023, which reduced premiums earned by $161 million and life benefits and underwriting expenses by $302 million in 2023. Premiums earned in each period of 2024 also reflected lower non-U.S. life business compared to 2023. Pre-tax underwriting earnings increased $26 million in the second quarter and were relatively unchanged in the first six months of 2024 compared to 2023. Earnings included gains from life contract commutations in the first six months of $50 million in 2024 and $137 million in 2023.

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

Insurance—Underwriting

Berkshire Hathaway Reinsurance Group

Retroactive reinsurance

Pre-tax underwriting losses from retroactive reinsurance derive from deferred charge amortization, changes in the estimated timing and amounts of future claim payments and foreign currency exchange gains and losses attributable to non-U.S. Dollar denominated contracts. Pre-tax underwriting losses before foreign currency effects were $135 million in the second quarter and $327 million in the first six months of 2024 compared to $245 million in the second quarter and $434 million in the first six months of 2023. The declines in underwriting losses were primarily due to net reductions in estimated ultimate liabilities of $119 million in the second quarter of 2024.

Unpaid losses assumed under retroactive reinsurance contracts were $33.5 billion at June 30, 2024, a decline of $1.2 billion since December 31, 2023. Unamortized deferred charges on retroactive reinsurance contracts were $9.1 billion at June 30, 2024, a decline of $431 million since December 31, 2023. Deferred charge amortization is included in underwriting earnings over the expected remaining claims settlement periods.

Periodic payment annuity

Periodic payment annuity business is price and demand-sensitive and the supply of available business is affected by the timing of underlying legal claim settlements. In 2023 and through the first six months of 2024, prices for new business were at unacceptable levels and we wrote no new business in either period.

Pre-tax underwriting losses from periodic payment annuity contracts in each pe

Showing the first 8K of 78K characters. Open the full section

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, 2023 and in particular the “Market Risk Disclosures” included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of June 30, 2024, 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 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, 2023, 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, believes 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 second quarter of 2024 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
April
Class A common stock		455	$	620,809.76		455	*
Class B common stock		—	$	—		—	*

May
Class A common stock		100	$	626,685.61		100	*
Class B common stock		—	$	—		—	*

June
Class A common stock		—	$	—		—	*
Class B common stock		—	$	—		—	*

——————

** 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 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 not adopted a Rule 10b5-1 trading arrangement (as defined in Item 408(a)(1)(i) of Regulation S-K) and no 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 second quarter of 2024.

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 June 30, 2024, 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: August 3, 2024		/S/ MARC D. HAMBURG
		(Signature)
		Marc D. Hamburg,
		Senior Vice President and
		Principal Financial Officer