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Berkshire Hathaway(BRK_B) - 2018 Q4 - Annual Report
BRK_BBerkshire Hathaway(BRK_B)2019-02-25 11:20

Financial Performance - Net earnings attributable to Berkshire Hathaway shareholders in 2018 were 4.021billion,asignificantdecreasefrom4.021 billion, a significant decrease from 44.94 billion in 2017, which included a one-time benefit of approximately 29.1billionfromtheTaxCutsandJobsAct[131].−After−taxearningsfrominsuranceunderwritingimprovedtoapproximately29.1 billion from the Tax Cuts and Jobs Act[131]. - After-tax earnings from insurance underwriting improved to approximately 1.566 billion in 2018, compared to after-tax losses of approximately 2.219billionin2017,drivenbyreducedestimatedliabilitiesandlowercatastrophelosses[131].−TheeffectiveincometaxrateforBerkshireHathawayin2018was21.42.219 billion in 2017, driven by reduced estimated liabilities and lower catastrophe losses[131]. - The effective income tax rate for Berkshire Hathaway in 2018 was 21.4%, down from 32.0% in 2017, reflecting the impact of the reduced U.S. corporate tax rate[137]. - After-tax losses from investments and derivative contracts were 17.737 billion in 2018, primarily due to 18billioninlossesfromchangesinmarketvaluesofequitysecurities[133].−Netearningsfor2018were18 billion in losses from changes in market values of equity securities[133]. - Net earnings for 2018 were 4,322 million, a significant decrease from 45,353millionin2017,reflectingadeclineofapproximately90.545,353 million in 2017, reflecting a decline of approximately 90.5%[253]. - Total revenues increased to 247,837 million in 2018, up from 239,933millionin2017,representingagrowthofabout3.8239,933 million in 2017, representing a growth of about 3.8%[251]. - Investment gains (losses) for 2018 were (22,155) million, compared to a gain of 1,410millionin2017,indicatingasubstantialnegativeshift[251].BusinessSegmentsPerformance−Therailroadbusinessreporteda31.81,410 million in 2017, indicating a substantial negative shift[251]. Business Segments Performance - The railroad business reported a 31.8% increase in after-tax earnings in 2018, totaling 5.219 billion, reflecting increased unit volume and higher average revenue per car[131]. - After-tax earnings from manufacturing, service, and retailing businesses rose by 29% in 2018, reaching 9.364billion,supportedbya139.364 billion, supported by a 13% increase in pre-tax earnings[133]. - GEICO's premiums written increased by 11.7% to 34.123 billion in 2018, with a loss ratio of 78.8%, down 7.8 percentage points from 2017[138]. - The utilities and energy businesses reported higher after-tax earnings in 2018, attributed to a lower effective income tax rate, despite some declines in pre-tax earnings in regulated utilities[131]. - BNSF's revenues reached 23.855billionin2018,anincreaseof23.855 billion in 2018, an increase of 2.468 billion (11.5%) from 21.387billionin2017[164].−BerkshireHathawayEnergy′stotalrevenuesin2018were21.387 billion in 2017[164]. - Berkshire Hathaway Energy's total revenues in 2018 were 19.987 billion, an increase from 18.854billionin2017,withpre−taxearningsof18.854 billion in 2017, with pre-tax earnings of 2.472 billion[170]. Investment and Financial Position - The company held cash, cash equivalents, and U.S. Treasury Bills of approximately 109billionatyear−end2018,including109 billion at year-end 2018, including 85 billion in U.S. Treasury Bills[213]. - Berkshire's consolidated shareholders' equity was approximately 349billionasofDecember31,2018,adecreaseof349 billion as of December 31, 2018, a decrease of 26.9 billion since September 30, 2018[213]. - The company reported a foreign currency translation loss of 1.424billionin2018,contrastingwithagainof1.424 billion in 2018, contrasting with a gain of 2.151 billion in 2017[237]. - Total liabilities rose to 355,294millionin2018,comparedto355,294 million in 2018, compared to 350,141 million in 2017, an increase of about 1.3%[253]. - The company maintained effective internal control over financial reporting as of December 31, 2018, as confirmed by an independent audit[240]. Claims and Liabilities - The company's consolidated claim liabilities were approximately 110billion,with84110 billion, with 84% related to GEICO and the Berkshire Hathaway Reinsurance Group[217]. - GEICO's gross unpaid losses were reported at 19.5 billion, with net claim liabilities of 18.6billionasofDecember31,2018[218].−Thecompanyrecordedadecreaseof18.6 billion as of December 31, 2018[218]. - The company recorded a decrease of 222 million in claim liability estimates during 2018, resulting in a corresponding increase in pre-tax earnings[218]. - The company anticipates that a one percentage point change in bodily injury claim severities could result in a 275millionincreaseordecreaseinrecordedliabilities[218].−Thecompanyutilizesvariousactuarialestimationmethodsforclaimliabilities,includingBornhuetter−Fergusonandchain−laddermethodologies[218].AcquisitionsandInvestments−TheacquisitionofMedicalLiabilityMutualInsuranceCompanywascompletedforapproximately275 million increase or decrease in recorded liabilities[218]. - The company utilizes various actuarial estimation methods for claim liabilities, including Bornhuetter-Ferguson and chain-ladder methodologies[218]. Acquisitions and Investments - The acquisition of Medical Liability Mutual Insurance Company was completed for approximately 2.5 billion, with fair value of assets at 6.1billionandliabilitiesat6.1 billion and liabilities at 3.6 billion[296]. - The total consideration for bolt-on acquisitions was approximately 1.0billionin2018,1.0 billion in 2018, 2.7 billion in 2017, and 1.4billionin2016[296].−Berkshire′sinvestmentinKraftHeinzhadafairvalueofapproximately1.4 billion in 2016[296]. - Berkshire's investment in Kraft Heinz had a fair value of approximately 14.0 billion as of December 31, 2018, down from 25.3billionin2017[308].−Approximately6825.3 billion in 2017[308]. - Approximately 68% of the aggregate fair value of equity securities was concentrated in five companies, including Apple Inc. at 40.3 billion[305]. Operational Metrics - Total operating expenses for BNSF increased by 1.908billion(13.61.908 billion (13.6%) to 16.992 billion in 2018, with a ratio of operating expenses to revenues of 66.9%[164]. - The company reported a comprehensive income of 2,059millionin2018,downfrom2,059 million in 2018, down from 66,768 million in 2017, a decrease of about 96.9%[253]. - The average equivalent Class A shares outstanding remained stable at approximately 1,643,795 in 2018, compared to 1,644,615 in 2017[251]. - The company evaluated approximately 99% of loan balances as performing and 95% as current in payment status as of December 31, 2018[314].