Berkshire Hathaway sees revenue rise as annual meeting begins [Boss Insurance]

Berkshire Hathaway Sees Revenue Rise As Annual Meeting Begins

New York (CNN) Warren Buffett’s Berkshire Hathaway announced an increase in first quarter 2023 earnings ahead of Oracle Omaha’s annual shareholders meeting.

Operating profit rose about 12% from a year earlier to $8.065 billion in the first quarter, the earnings release said on Saturday. Operating profit is the profit that remains after the costs of a company’s basic operations have been removed.

The conglomerate posted a profit of $35.5 billion in the first quarter.

The rise in revenue is attributed in part to a return to Berkshire’s insurance empire.

The company’s insurance underwriting business has seen a sharp increase from profits of $167 million in the first quarter of 2022 to $911 million now. Insurance investment income increased from $1.17 billion to $1.97 billion.

Geico, which is owned by Berkshire Hathaway, posted a pretax underwriting loss of $1.9 billion at the end of the year after losing market share to competitor Progressive. So far this year, it is doing better, posting an underwriting profit of $703 million in the first quarter of this year, thanks to higher average premiums and lower advertising costs, despite frequencies lower claims.

However, Berkshire’s energy company and freight railroad company BNSF reported lower profits from this quarter last year.

Berkshire also repurchased about $4.4 billion in stock and its cash hoard grew to $130.6 billion from $128 billion in the fourth quarter of 2022.

Dubbed “Woodstock for Capitalists”, the annual meeting will feature Buffett, 92, and Berkshire Vice Chairman Charlie Munger, 99, who took the stage on Saturday to answer shareholder questions and engage in discussion on business and the economy in general.

Takeaways from the meeting

  • Investors have been eagerly awaiting to hear from the Oracle of Omaha about the recent bank failures and industry upheaval and, unsurprisingly, they were among the topics he addressed. “It would have been catastrophic,” Buffett said, if regulators hadn’t backed depositors at Silicon Valley Bank.
  • Buffett also noted that fear in the banking industry has always been contagious, but the creation of the FDIC was “extremely sensible”, assuring that the agency and the US government have no interest in letting banks fail. Regarding First Republic Bank, Buffett said, “The CEO and director should suffer. The shareholders going forward shouldn’t suffer. They haven’t done anything.”
  • The nonagenarians were skeptical of the hyperbolic chatter surrounding AI, but said it would be transformative. “We’re going to see a lot more robotics in the world,” Munger said. “I’m personally skeptical of some of the hype around AI. I think old-school intelligence works pretty well.”
  • Buffett also commented on the commercial real estate market. There is an abundance of vacant space in office buildings and rising interest rates have also caused developers to delay new construction projects. “We’re starting to see the consequences of people who might borrow at 2.5% and find out that doesn’t work at current rates,” Buffett said.
  • Buffett also revealed the top company in Berkshire’s extensive portfolio. “Apple is different from other companies we own. It happens to be a better company,” Buffett said. Berkshire recently held a 5.6% stake in Apple, Reuters reported.

CNN’s Elisabeth Buchwald contributed to this report.